MASTER 
NEGATIVE 

NO.  95-82387 


COPYRIGHT  STATEMENT 


The  copyright  law  of  the  United  States  (Title  17,  United  States  Code) 
governs  the  making  of  photocopies  or  other  reproductions  of  copyrighted 
materials  including  foreign  works  under  certain  conditions.  In  addition, 
the  United  States  extends  protection  to  foreign  works  by  means  of 
various  international  conventions,  bilateral  agreements,  and 
proclamations. 

Under  certain  conditions  specified  in  the  law,  libraries  and  archives  are 
authorized  to  furnish  a  photocopy  or  other  reproduction.  One  of  these 
specified  conditions  is  that  the  photocopy  or  reproduction  is  not  to  be 
"used  for  any  purpose  other  than  private  study,  scholarship,  or  research." 
If  a  user  makes  a  request  for,  or  later  uses,  a  photocopy  or  reproduction 
for  purposes  In  excess  of  "fair  use,"  that  user  may  be  liable  for  copyright 
infringement. 

The  Columbia  University  Libraries  reserve  the  right  to  refuse  to  accept  a 
copying  order  if,  in  its  judgement,  fulfillment  of  the  order  would  involve 
violation  of  the  copyright  law. 


Author: 


Klein,  Henry  H. 


Title: 


Bankrupting  a  great  city 
(the  story  of  New  York) 

PI3.CG' 

N[ew]  Y[ork]  City 


Date: 


[1 91 5] 


^5'l2in-\ 


MASTER   NEGATIVE   « 


COLUMBIA  UNIVERSITY  LIBRARIES 
PRESERVATION  DIVISION 

BIBLIOGRAPHIC  MICROFORM  TARGET 


ORIGINAL  MATERIAL  AS  FILMED  -    EXISTING  BIBLIOGRAPHIC  RECORD 


BUSINESS 

.670 
K67 


Klein,  Henry  H  1879- 

Bankrupting  a  great  city  (the  story  of  New  York)  by  Henry 
H.  Klein . . .    Nfewj  Ytorkj  city,  The  author  [®1915j 

188  p.    nius.  «-.     facsins.     21^. 


J 


1.  New  York  (City)— Pol.  &  govt.        i.  Title. 


15—10860 


library 


of  Congress         /^^ 


HJ9289.N4K6 
[42hli 


< 


RESTRICTIONS  ON  USE: 


TECHNICAL  MICROFORM  DATA 


FILM  SIZE: 


^v^Uv 


REDUCTION  RATIO; 


/ 


IMAGE  PLACEMENT:  lA    f  IIA     IB     IIB 


DATE  FILMED: 


^  /^3  H5 


INITIALS: 


DG 


TRACKING  #  : 


oVPp:/ 


FILMED  BY  PRESERVATION  RESOURCES,  BETHLEHEM,  PA. 


> 


.^/ 


.^^^^'V^ 

^^;<^, 


(JO 
CJl 

3 

3 


CT 
O  > 

?Q  a 
3  X 

N  CO 


CO 

oi 
^^ 

OOM 

o 


^^. 


^.. 


CJl 

3 


> 

o  m 


CD  O 

OQ 

c  c/5 


X 

< 

N 


M 


jv^ 


^^, 


SvA 


a? 


s/. 


^ 


^ 


^i^ 


<P%    ^        ♦.''\ 


**^ 


^^^' 


O 

o 

3 
3 


o 

3 

3 


3^^ 


> 


.a^^ 


^. 


.'b'> 


^^ 


%y* 


o 
o 

3 
3 


lO 

^. 

en 

• 

—            ^ppnr 

^ 

l£ 

o 


.^   i  (^ 


CO 


bo 


o- 


«  g 


In 


1.0  mm 


1.5  mm 


2.0  mm 


ABCDEFGHIJKLMNOPORSTUVWXYZ 
abcdetghi(klmnopqrstuvwxyzl234  567890 


ABCDEFGHIJKLMNOPQRSTUVWXYZ 
abcdefghijklmnopqrstuvwxyzl234567890 


ABCDEFGHIJKLMNOPQRSTUVWXYZ 

abcdefghijklmnopqrstuvwxyz 

1234567890 


2.5  mm 


ABCDEFGHIJKLMNOPQRSTUVWXYZ 

abcdefghijklmnopqrstuvwxyz 

1234567890 


\^o 


r 

V 


^^ 


^o 


^o 


¥# 


^f^ 


¥c. 


***. 


c? 


c^ 


'4^ 


:xp 


^CP 


fp 


fo> 


m 

H 

O 
O 

-o  m  "o 

OL,"D 
>  C  CO 
I  ~  ^ 

m 

O 
m 


C^ 


'i^ 


c^ 


< 


« 


^P 


Ol 

3 


o 

3 
3 


11 


Columbia  IMnitietf  ftp 

tntljeCttpofMmigork 

THE  LIBRARIES 


GRADUATE 

SCHOOL  OF  BUSINESS 

LIBRARY 


Given  by 

Baker  Voorhis 


vl 


(QUTHRIE,  BANOb  di  VAi^  »»i*«K««»»^fl# 


BANKRUPTING 


A  GREAT  CITY 


(THE  STORY  OF  NEW  YORK) 


BY 


HENRY   H.    KLEIN 


AUTHOR  OF 


'^Standard  Oil  or  The  People* 
**Ho'!v  to  Prevent  Economic  Disaster  in  America 


CHIEF   INVESTIGATOR   FOR 


Aldermanic  Street  Cleaning  Committee  (N.  Y.  C.)  1907 

Citizens'  Police  Committee  (N.  Y.  C)  1912 

State  Civil  Service  Commission  (N.  Y.  City  Investigation)  1914 


Cloth  Cover  (library  edition)  75c,  postpaid 
Heavy  Paper  Cover  (popular  edition)  40c.,  postpaid 


PU^LIS^itD  BV  THK  AUTHOR 
TRIBUNE  BUILDING 


I  t  .  >  •    t  >     • 


n:  y.'Qity' 


t     • 


i 


0£C  17   1S47 


A  STORY  THAT  AFFECTS  ALL 

CITIES  AND  ALL  PEOPLE 


■■ 


3)47^ 

K67 


Copyright,  1913  and  1915 

BY 

Henry  H.  Klein. 


All  rights   reserved,   including  translation 
into  foreign  languages. 


ILLUSTRATED 


*      w 


FOREWORD 


The  first  ten  chapters  of  this  story  jvere  written  in  1911,  the 
succeeding  twelve  in  1913,  and  the  last  four  in  1915.  It  required  no 
gift  of  prophecy  to  foretell  the  result  of  accumulated  waste  and  mis- 
^  management  such  as  described  in  the  following  pages.  The  purpose 
of  the  story  which  is  based  solely  on  facts,  is  to  awaken  the  people  in 
all  large  cities  to  the  danger  which  confronts  them.  Unless  the  cities 
acquire  additional  revenues  or  curtail  the  cost  of  government,  bank- 
ruptcy is  certain.    Taxes  will  become  uncollectible. 

The  cities  must  own  their  own  public  utilities  or  derive  most  of 
the  profits  therefrom,  to  provide  for  public  need.  Up  to  the  present 
time,  the  bulk  of  profits  of  public  service  corporations  has  gone  to  in- 
crease the  already  swollen  fortunes  of  only  a  few  men  and  families. 
The  cities  can  acquire  most  of  the  income  from  these  properties  with- 
out cost  and  in  a  simple  manner.  If  the  nation  limits  private  fortunes 
to  a  reasonable  sum,  say  ten  million  dollars,  all  wealth  in  excess  of  that 
sum  goes  back  to  the  nation.  The  nation  thus  becomes  the  pos- 
sessor of  securities  in  all  large  corporations  and  of  national,  state 
and  city  bonds. 

These  bonds  can  be  cancelled  to  relieve  the  burden  of  public 
debt.  The  bulk  of  profits  on  public  utilities  would  go  to  the  cities 
and  states  in  which  they  are  located,  while  the  nation  would  draw 
its  income  from  national  railroads  and  industrial  corporations. 
Nation,  states  and  cities  would  be  provided  with  new  revenues  and 
taxation  might  in  time  disappear.  The  cost  of  living  would  be  low- 
ered and  the  menace  of  large  private  fortunes  removed. 

This  is  the  remedy  not  only  for  burdensome  taxation,  but  for 
economic  hardship  in  the  United  States.  Greed  for  gain  has  pro- 
duced gross  social  inequality  and  extravagant  and  corrupt  govern- 
ment. The  cause  must  be  removed.  It  is  the  hope  of  the  author 
that  this  result  will  be  accomplished. 


■«  i 


ii 


m 


•  « 


CHAPTERS 


PAGE 

I.    The  City  Hall  Sold  to  the  Highest  Bidder 7 

II.    The  Slumbering  Citizen  Awakes 15 

III.  Counting  the  Cost  of  City  Mismanagement 23 

IV.  Viewing  the  Graf t  with  the  Reporter 31 

V.     Wastv  in  Bridges  and  Street  Cleaning 39 

VI.  Water  Waste  and  Extravagance 46 

VII.  Dock  Mismanagement  and  Graft 53 

VIII.  The  Corruption  of  the  City's  Police. 59 

IX.  The  City's  Health  Bartered  for  Gold 67 

X.     Five  Million  Dollars  a  Year  the  Extortionate  Cost  of  City 

j^ignting  •••••.•  •'•-•  •  •-•  •  •-•  •  •-•  ••••.«••-••-•••  ••••  ••-.».  •-•  •-•  •  •-•     /J 

XI.    Park   Department   Privileges  and  Property  Exploited  for 

Private  Gain 83 

XII.  The  Lives  of  the  People  Were  Imperilled  and  Their  Money 
Wasted  Through  Political  Misuse  of  the  Fire  Depart- 
ment   .^  ... . .     89 

XIII.  The  City  Was  Robbed  of  Millions  of  Dollars  Through  the 

Acquisition  of  Land  for  Public  Use— Innocent  Investors 
Were  Victimized  by  Land  Speculators 95 

XIV.  Vast  Fortunes  Were  Made  Out  of  City  Franchises  and  the 

People  Were  Grossly  Overcharged  and  Defrauded  by 
Swindling  Financial  Operations............. ......v..  101 

XV.  The  City's  Millions  Were  Wasted  and  Its  Dependents  Im- 
properly Treated  in  the  Hospital,  Charities  and  Correc- 
tional  Departments...  .^  ....-•..-••••-•••.•••-.*....-.. .- l"/ 

XVI.  Education  In  the  Public  Schools  Was  Misdirected  and 
Millions  of  Dollars  Were  Wasted  by  "Bureaucratic 
School  Government" 113 

XVII.  The  City's  Money  Was  Wasted  and  the  Interest  of  Its 
Citizens  Otherwise  Damaged  Through  Improper  Street 
Paving  and  Faulty  Sewer  Construction .^ ,^^^,  119 


CHAPTERS 

PAGE 
XVIII.    The  City's  Tenements  Bred  Vice  and  Crime  While  the  Func- 
tions  of   Its  Tenement   House  and   Building   Bureaus 
Were   Neglected 125 

XIX.  The  City  Paid  Twice  What  It  Should  for  Printing  and  Sta- 
tionery and  It  Spent  $400,000  a  Year  for  the  Repair  of 
Automobiles  Used  by  City  Officials — Its  Peddlers  Were 
Victimized  on  Licenses 129 

XX.  The  City  Elected  a  "Reform"  Administration,  but  the  Failure 
of  Economy  Only  Aggravated  Its  Financial  Embarrass- 
ment  135 

XXI.  The  Mayor's  Character  Was  Gradually  Revealed  by  His 
Own  Official  Acts  and  His  "Economy"  and  That  of  His 
Associates  in  Office,  Continued  to  Hasten  the  City's  End  141 

XXII.  The  Climax  of  the  City's  Mismanagement  Was  Reached 
With  the  Acceptance  of  a  Subway  Contract  Which 
Drained  the  City's  Last  Resources  and  Which  Meant 
Profits  of  Untold  Millions  to  Private  Individuals.^ 147 

XXIII.  The  Reformers  Conspire  to  "Save"  the  City 153 

XXIV.  The  "Reform"  Candidates  Were  Elected  as  a  Rebuke  to  the 

Political  Power  Which  Impeached  an  Unworthy  Gov- 
ernor   161 

XXV.  The  Final  Assault  on  the  City's  Credit  Came  With  an  At- 
tempt to  Turn  Over  Its  Remaining  Waterfront  to  a 
Private  Corporation.  The  Humbug  of  "Efficiency  and 
Economy"  Was  Exploded 165 

XXVI.  The  City  Failed  Because  Its  Borrowing  Capacity  Was  Ex- 
hausted, Its  Power  of  Taxation  Overreached  and  Its 
Principal  Assets  in  the  Hands  of  Individuals  and  Private 

Corporations 173 

Statistical  Tables   181 

Father  Knickerbocker   Dispossessed   (cartoon) .«.«  — ^  .^ . .  188 


r!  I 

■li 

■31 


f 


I)  ^'i 


GOING!    GOING!!    GONE!!! 


The  City  Hall  Sold  at  Public  Auction 


CHAPTER  I 
THE  CITY  HALL  SOLD  TO  THE  HIGHEST  BIDDER 

"What  am  I  offered?  What  am  I  offered,  gentlemen,  for  this  fine  build- 
ing, this  superb  structure,  this  beautiful  historic  gem,  this  monument  of  munici- 
pal greatness  and  glory — the  finest  building  in  the  western  hemisphere  ?  What 
am  I  offered?" 

The  City  Hall  was  for  sale  and  the  auctioneer  mounted  a  platform  at  the 
foot  of  its  marble  stairs.  In  front  of  him,  the  park  was  packed  with  people 
to  witness  the  sacrifice  of  the  city's  last  and  most  precious  parcel — the  sole 
remaining  emblem  of  its  prestige  and  power.     The  majesty  of  the  city  was 

gone. 

The  city  was  bankrupt!  The  burden  of  its  debt  was  too  great  for  the 
taxpayers  to  bear !  It  was  unable  to  pay  interest  on  its  bonded  debt  and  the 
swarm  of  creditors  and  bondholders,  following  the  usual  course,  petitioned 
the  court  for  relief.     The  petition  was  granted. 

The  public  debt  was  stupendous.  It  exceeded  a  thousand  million  dollars. 
It  approximated  the  debt  of  the  entire  nation.  The  city's  total  bonded  obli- 
gation was  greater  than  the  wealth  of  its  entire  population,  save  the  fortunes 
of  half  a  dozen  families. 

Its  annual  interest  requirement  was  ENORMOUS.  It  exceeded  the 
weekly  income  of  all  but  a  few  of  its  five  million  people.  The  total  interest 
and  redemption  was  fifty  million  dollars,  most  of  it  made  up  by  taxation. 
The  balance  was  paid  out  of  income  on  public  property. 

The  tax  rate  was  virtual  confiscation.     It  approximated  the  net  income 

on  part  of  the  city's  taxable  property.     Unimproved  parcels  that  returned 

no  profit  were  only  a  drug  on  the  market.     They  were  a  burden  to  carry. 

Excessive  taxation  made  them  unsalable.     Some  of  these  were  assessed  for 

more  than  they  were  worth  and  unpaid  taxes  accumulated  at  high  interest. 

The  sale  of  improved  property  ceased  long  ago.  It  was  realized  by 
shrewd  investors  that  the  financial  ruin  of  the  city  was  impending.  The 
public  funds  had  long  been  wasted  and  the  city's  only  remaining  asset  was 
— its  despotic  power  of  taxation.  This  was  now  gone,  for  taxation  had 
reached  its  legal  limit. 

Frequent  charges  of  official  misconduct  had  been  made,  but  proof  of 
guilt  was  followed  only  by  banishment  from  public  office  and— a  depleted 
public  treasury. 

The  city  was  ruined  through  the  corruption  of  its  politics  and  through 
the  base  betrayal  of  its  people.    Incompetency  in  public  office  only  hastened  the 


end.  Even  the  newspapers  failed  in  their  duty  to  expose  the  public  wrong. 
The  silence  of  some  of  them  had  been  purchased,  while  others  failed  through 
inefficiency  and  lack  of  public  zeal. 

The  crash  was  inevitable!  The  limit  of  the  city's  borrowing  as  well  as 
taxing  had  been  reached.  Bankruptcy  saved  the  people  from  a  worse  fate, 
for  confiscation  of  private  property  and  ruin  were  the  only  alternative.  The 
city  chose  the  wiser  course,  the  disaster  was  robbed  of  its  terror  and  the 
city  was  left  where  its  redemption,  and  even  its  final  restoration,  might  be 
attempted. 

Such  was  the  picture  in  the  public  mind  when  the  sale  of  the  City  Hall 
began.  There  had  been  talk  of  repudiating  the  last  five  millions  of  public 
debt  in  order  to  save  the  city's  capitol,  but  the  people  were  finally  persuaded 
that  the  only  hope  of  restoration  lay  in  a  complete  wiping  out  of  the  city's 
obligation. 

Not  a  sound  followed  the  auctioneer's  call.  It  was  as  if  a  funeral  hymn 
has  been  chanted  over  the  remains  of  a  dying  city. 

"Come,  gentlemen,"  the  auctioneer  gently  urged.  "What  am  I  offered? 
This  parcel  must  be  sold.  I  wish  I  did'nt  have  to  sell  it.  Five  millions 
must  be  paid  and  the  city  must  raise  it  on  this  property.  Four  acres  of  the 
finest  real  estate  in  the  world  goes  with  this  building." 

The  people  looked  around  in  awe.  In  front  of  them  the  plaza  was  cov- 
ered with  chairs  occupied  by  persons  who  had  come  to  bid.  Where  they 
stood  were  restricted  grass  plots,  cemented  walks  and  a  city's  lifeless  fountain. 
The  fountain  was  covered  with  dust. 

"I'm  worth  a  million  dollars,"  muttered  a  weak  and  trembling  voice, 
"and  I'll  give  every  dollar  I  own  to  save  the  City  Hall." 

The  people  looked  in  admiration  at  the  old  man.  He  was  tall,  thin  and 
leaned  heavily  on  a  cane.     They  praised  his  generosity. 

"One  million  dollars  I'm  offered,"  sputtered  the  auctioneer,  "one  million 
dollars !  I  wish  I  could  sell  it  for  that  sum  to  that  gentleman.  He's  worthy 
of  a  monument  where  he  stands.  Who  will  help  him  raise  the  sacrifice  to 
five  millions?** 

Not  a  voice  responded.  The  unexpected  offer  roused  the  people  to  new 
hope,  but  the  silence  that  followed  crushed  them.  The  auctioneer  waited  for 
another  bid. 

"Two  million  dollars,"  exclaimed  another  voice. 

"Two  million  dollars,"  the  autioneer  called. 

The  bidder  was  a  young  man,  surrounded  by  a  group  of  older  men,  who 
seemed  sponsor  for  his  bid. 

"Why,  two  million  dollars  won't  pay  for  the  ground  on  which  the  build- 
ing stands.  It's  worth  more  than  that  without  the  park.  What's  your  offer, 
gentleman?"  the  auctioneer  retorted. 

The  crowd  pressed  closer  to  the  auctioneer's  stand  and  encroached  on 
the  plaza  where  the  aristocracy  of  business  and  finance  was  gathered. 

8 


"Three  million  dollars,"  exclaimed  another  voice. 

"Three  million  dollars,"  shouted  the  auctioneer. 

All  eyes  turned  toward  the  new  bidder.  The  crowd  echoed  the  auc- 
tioneer's call.  The  bidder  was  prominent  in  the  city  and  a  leader  in  sectarian 
affairs.  He  was  a  well  known  contractor  who  had  retired  with  a  fortune 
estimated  at  ten  million  dollars.  He  added  the  last  five  million  to  his  pile 
through  a  change  in  the  motive  power  of  a  city  railroad.  The  railroad 
afterward  became  BANKRUPT  and  when  its  affairs  were  wound  up  and 
the  receivership  ended,  it  was  found  that  not  a  dollar  of  old  capital  remained 
in  the  treasury. 

Thousands  of  business  men  who  invested  their  small  savings  in  the  rail- 
road were  ruined  by  the  collapse.  Widows,  whose  only  inheritances  were 
in  the  railroad's  securities,  were  impoverished.  The  finances  of  the  road 
were  reorganized,  new  capital  was  injected,  and  the  paper  securities  in  the 
hands  of  the  public  were  left  without  even  the  value  of  a  dollar.  New  stocks 
and  new  securities  were  issued;  the  old  were  wiped  out. 

"Three  million  dollars,"  repeated  the  auctioneer.  "Three  million  dollars. 
Why,  the  property  is  worth  ten  times  that  sum.  It's  assessed  at  $20,000,000 
and  it's  worth  a  great  deal  more.  Where's  the  man  who  wants  to  make  his 
fortune  on  this  deal  ?  He'll  go  down  in  history  if  he  buys  this  parcel.  That's 
worth  three  million  alone." 

"Three  million,  five  hundred  thousand  dollars,"  shouted  another  voice. 

"Three  million,  five  hundred  thousand  dollars,"  the  auctioneer  repeated. 
"It  looks  as  if  we're  all  poor.  Five  hundred  thousand  dollar  bids.  That's  a 
pity."     The  auctioneer  raised  his  voice. 

"Why,  if  we  can't  get  more  than  that  for  this  property,  I'll  bid  it  in 
myself,"  he  shouted. 

The  audience  laughed  at  the  threat. 

"Yes,  and  I'll  borrow  every  dollar  from  the  bank,  too,"  he  added.  *Why, 
the  statue  on  this  building  is  worth  more  than  that  for  a  souvenir." 

The  humor  struck  the  crowd.  The  statue  was  that  of  Justice  blindfolded. 
The  last  offer  was  from  a  prominent  lawyer  who  represented  an  estate  of 
vast  wealth.  The  widow,  sole  executrix  and  beneficiary,  had  spent  thousands 
of  dollars  to  improve  the  appearance  of  the  interior  of  the  City  Hall.  She 
was  engaged  in  many  philanthropies.  There  were  rumors  that  she  would 
save  the  capitol  for  the  people. 

"Four  million  dollars,"  came  from  another  voice. 

"Four  million  dollars,"  the  auctioneer  called.  "A  million  an  acre  with- 
out the  building." 

The  bid  was  from  a  group  of  real  estate  speculators. 

"Four  million  and  a  half!" 

The  crowd  strained  to  see  the  new  bidder. 

"Four   million,   five   hundred   thousand   dollars,"    the   auctioneer   called. 


'I' 


i 


ii 


"Four  million,  five  hundred  thousand  dollars!    Look  around,  gentlemen,  and 
see  what  you're  getting." 

The  crowd  swept  its  eye  over  the  scene.  In  front  stood  the  stately 
edifice  on  the  block.  The  history  of  the  city's  progress  was  written  in  every 
line.  It's  doom  was  foreshadowed  in  the  last  offer.  Behind  them  the  people 
saw  the  symbol  of  a  mighty  nation  in  the  heavy  outlines  of  its  sombre  granite 
post  office.  The  majesty  of  a  free  and  enlightened  press  was  proclaimed 
from  the  gilded  dome  of  the  lofty  structure  that  towered  over  the  City  Hall. 
The  park  was  the  centre  of  the  greatest  commercial  activity  in  the  world. 
It  was  the  heart  of  a  metropolis  that  pulsed  with  the  pride  of  an  anxious 
and  stirring  people. 

"Four  million,  seven  hundred  and  fifty  thousand  dollars,"  came  the 
next  bid. 

The  crowd  moved  uneasily.  The  auctioneer  repeated  the  call.  The  bid 
was  from  an  estate  that  owned  property  worth  ten  times  that  sum. 

"Five  million  dollars!"  cracked  a  final  voice. 

It  was  like  a  thunder  clap.  The  effect  was  startling.  Every  eye  strained 
to  see  the  bidder.  Every  neck  stretched  toward  the  voice.  The  people 
pushed  forward  in  a  mass  and  some  of  those  who  were  seated  in  front 
moved  away.  The  bidder  was  tall,  slim,  and  wore  a  dark  brown  moustache. 
He  occupied  a  seat  in  the  front  row,  but  was  now  standing  that  all  might 
see  him.     His  bid  was  a  challenge  to  all  those  present. 

The  bidder  was  quickly  identified.  He  represented  a  group  of  the  most 
powerful  financiers  in  the  world.  He  was  formerly  their  agent  in  one  of 
the  large  insurance  companies,  where  the  money  of  the  policyholders  was 
used  to  exploit  the  financiers'  private  enterprises.  They  controlled  the  wealth 
of  the  nation.  The  end  of  the  bidding  had  come  for  it  was  plain  that  no 
one  could  match  the  resources  of  this  financier. 

"Five  million  dollars,"  exclaimed  the  autioneer  over  the  rumble  and 
noise  of  voices.     "Five  million  dollars! — Any  more?" 

There  was  no  answer.     The  auctioneer  raised  his  gavel. 

"Any  more?"  he  repeated. 

Not  a  voice  responded.  The  banker  remained  standing.  The  people 
stared  at  his  audacity. 

"Five  million  dollars!"  the  auctioneer  again  called.  "Five  million  dol- 
lars first,  five  million  dollars  second,  five  million  dollars  third  and  last  call. 
— Any  more?" 

There  was  a  stir  in  the  crowd  of  spectators. 

"Let  me  at  'em,  let  me  at  'em!"  shouted  an  angry  voice.  ''They're 
the  ones  that  ruined  the  city.  They  stole  the  city's  money  by  buying  its 
bonds  and  now  they  want  to  buy  up  the  city  itself.  Let  me  at  'em,  the 
robbers !" 

"Yes,  they  bought  the  bonds  and  never  put  up  a  dollar  for  them,  either," 
answered  another.    "They  gave  the  city  a  little  at  a  time  and  drew  interest 

10 


on  the  whole  rouffd  sum.  That's  what  they  did.  The  city  had  no  right  to 
issue  bonds  at  all.  They  ought  to  have  paid  expenses  out  of  each  years'  taxes 
without  bond  issues.  It  was  throwing  millions  away  for  the  benefit  of  the 
bankers,  that's  all." 

The  outburst  was  lost  in  the  auctioneer's  roar  as  he  banged  his  gavel 
and  completed  the  sale. 

"Going,  going,  gone!"  he  shouted. 

The  people  were  too  stunned  to  move.  The  group  in  front  hurried 
away  and  the  crowd  pushed  solidly  forward.  Chairs  were  overturned  and 
trampled  upon,  but  the  crowd  was  checked  until  the  formalities  of  the  sale 
were  concluded  and  the  successful  bidder  was  out  of  reach  and  on  his  way 
downtown  in  an  automobile.  A  check  for  ten  per  cent,  of  the  purchase 
price  was  left  to  bind  the  bargain. 

The  city  had  defaulted  on  bonds  that  were  issued  for  asphalt  pavement. 
They  totalled  $40,000,000.  Counsel  for  the  taxpayers  who  protested  against 
their  payment  pointed  out  that  the  bonds  were  illegal. 

"The  city  can  lend  its  credit  only  for  permanent  public  improvement," 
he  argued  with  the  city's  officials.  "The  pavements  for  which  these  bonds 
were  issued  have  long  been  used  up  and  replaced  and  the  improvements 
were  only  temporary.  Some  of  the  pavements  have  been  replaced  more 
than  once  and  the  city  is  therefore  paying  interest  on  more  than  one  set  of 
bonds  for  pavement  on  the  same  streets.    The  bonds  should  be  repudiated." 

The  bonds  in  dispute  had  forty  years  more  to  run  with  interest  at  four 
per  cent.  The  interest  was  $1,600,000  a  year.  The  city  officials,  who  vainly 
battled  against  the  tide  of  extravagance,  decided  to  end  the  unequal  struggle 
by  confessing  the  city  bankrupt  and  by  throwing  its  finances  into  the  hands 
of  the  court.  Only  a  few  years  before  the  court  had  been  invoked  to  de- 
termine the  city's  last  borrowing  margin,  the  debt  having  grown  so  enor- 
mous that  it  was  claimed  that  the  margin  had  been  wiped  out.  Since  that 
time  realty  assessments  had  been  increased  $1,500,000,000,  and  the  $150,000,000 
added  to  the  margin  of  credit  was  exhausted. 

The  city's  net  bonded  debt  at  the  time  of  the  failure  was  $800,000,000. 
Its  gross  debt  was,  as  stated,  over  one  biUion  dollars.  Its  annual  budget 
for  administrative  expense  was  $200,000,000.  Its  annual  outlay  for  "perma- 
nent" public  improvement  was  $50,000,000,  and  this  did  not  include  the  ex- 
penditures for  a  new  water  system  amounting  to  $30,000,000  a  year.  The 
city's  total  annual  outlay,  therefore,  was  over  $250,000,000,  and  more  ap- 
proximately $300,000,000. 

The  city  had  as  security  for  its  outstanding  bonds  property  of  an  ap- 
praised value  of  one  billion  two  hundred  million  dollars.  It  had  a  park 
estimated  at  $350,000,000.  It  had  another  appraised  at  $150,000,000  and  one 
in  another  section  of  the  city,  valued  at  $25,000,000.  It  had  two  others 
valued  at  $15,000,000  each.  It  had  small  parks  in  every  section  of  the  city; 
Jt  had  school  houses  costing  $100,000,000  erected  on  property  worth  half 
that  sum  more;  it  had  police  stations  and  fire  houses  on  other  valuable  par- 

n 


eels;  it  had  waterfront  property  and  an  interest  in  an  underground  rail- 
road whose  value  to  the  city  was  only  in  the  future. 

The  bonds  for  the  railroad,  amounting  to  many  millions  of  dollars,  were 
issued  so  that  interest  was  paid  out  of  earnings  and  the  bonds  themselves 
were  amortized  at  the  rate  of  a  small  fraction  each  year  out  of  profits.  The 
railroad  itself,  zvithout  equipment,  reverted  to  the  city  after  two  generations. 
The  city  had  advanced  its  credit  to  those  who  were  operating  the  railroad 
for  their  own  profit;  and  the  profit  was  enormous.  Only  a  few  years  before 
the  failure,  the  city  had  obligated  itself  to  the  extent  of  $200,000,000  for 
additional  subway  facilities  on  even  more  unprofitable  terms ! 

The  first  sale  under  the  bankruptcy  order  was  held  in  an  outlying  part 
of  the  city.  The  park  valued  at  $25,000,000  was  disposed  of.  It  brought 
$5,000,000  and  was  bought  for  investment  and  speculation.  Some  of  those 
who  bid  on  the  City  Hall  parcel  bought  slices  of  the  park.  One  slice  was 
purchased  by  interests  identified  with  the  railroad,  with  part  of  the  rail- 
road's profits.     They  bought  two  fifths  of  the  park  for  $2,000,000. 

"We'll  extend  the  railroad  to  the  property,"  they  announced  and  urged 
the  public  to  buy  from  them  at  greatly  increased  prices.  They  applied  to 
the  city  for  permission  to  extend  the  road  and  for  payment  of  construction 
cost,  and  they  themselves  were  to  do  the  constructing  and  render  the  bills 
to  the  city.  This  exclusive  privilege  of  subway  construction  was  provided 
for  in  the  old  rapid  transit  act  under  which  the  road  was  built.  All  future 
subways  were  to  be  regarded  only  in  the  nature  of  additions  to  the  present 
structure. 

"Cure  congestion  and  save  the  lives  of  the  little  ones,"  they  urged  on 
the  city  authorities  as  an  argument  why  the  road  should  be  extended.  "Get 
the  people  out  into  the  suburbs." 

The  argument  was  REPEATED  by  many  worthy  citizens. 

The  city's  richest  parcel  brought  only  $100,000,000.  This  was  a  genuine 
disappointment  to  the  city's  chief  executive,  who  had  been  appointed  receiver 
of  the  city's  property  by  the  court.  The  receiver  appointed  as  counsel  his 
protege,  a  lawyer  and  a  former  city  official.  The  sales  were  conducted  under 
the  latter's  direction. 

The  money  derived  from  this  parcel,  which  had  been  cut  up  into  fifteen 
parts,  was  used  to  take  up  bonds  that  had  been  issued  for  various  purposes. 
Some  of  it  went  for  bonds  issued  for  the  new  criminal  courts  building,  which 
cost  $3,000,000;  some  for  the  new  city  record  building  and  for  the  new 
municipal  building. 

The  remainder  went  for  bonds  issued  for  minor  municipal  purposes, 
such  as  the  purchase  of  plant  and  stock  for  street  cleaning.  This  stock  had 
been  used  up  many  years  before  the  bonds  became  due  and  the  plants  were 
twice  rebuilt  since  the  first  bonds  were  issued.  A  large  part  of  the  money 
was  used  to  take  up  the  pavement  bonds  on  which  the  payment  of  interest 
had  been  refused.  One  set  of  these  bonds,  totalling  $100,000,  had  100  years 
more  to  run  with  interest  at  seven  per  cent! 

12 


One  hundred  million  dollars  from  the  rest  of  the  property  went  to  defray 
the  cost  of  bridges;  $15,000,000  for  the  consolidated  library;  $20,000,000 
for  armories  and  armory  sites;  $50,000,000  for  small  parks;  $100,000,000 
for  new  streets,  $150,000,000  for  school  houses  and  sites;  $25,000,000  for 
public  museums  and  hospitals  and  millions  more  for  water  works,  water 
pipes,  water  plants  and  other  municipal  purposes. 

There  were  even  some  bonds  for  the  construction  of  the  old  granite 
courthouse,  that  stands  a  monument  of  ancient  historic  graft! 

A  large  part  of  the  city's  property  was  purchased  by  former  city  officials 
who  were  retired  and  wealthy.  One  of  them,  reputed  worth  millions,  pur- 
chased property  for  a  million  dollars.  He  obtained  a  choice  section  of  the 
great  park  in  the  heart  of  the  city  on  which  it  was  said  he  intended  to 
erect  a  row  of  high-class  apartment  houses.  This  former  official,  it  was  said, 
owned  a  large  block  of  stock  in  a  private  lighting  company  which  derived 
several  million  dollars  a  year  from  the  city  for  power  and  illuminating 
current.  He  had,  when  in  office,  the  responsibility  of  endorsing  the  com- 
pany's bills  and  the  authority  to  increase  or  curtail  the  use  of  the  company's 
service.  It  was  also  reported  that  he  had  a  fortune  invested  in  real  estate 
and  government  securities. 

Another  purchaser  of  city  real  estate  was  a  former  law  officer  of  the 
city,  who  acquired  a  dozen  small  parks  for  only  a  fraction  of  their  value. 
This  citizen  was  long  out  of  office,  but  his  wealth  accumulated  so  rapidly 
that  he  was  rated  several  times  a  millionaire.  His  purchases  aggregated 
a  million  dollars.  His  knowledge  of  values  was  based  on  his  experience  in 
office  where  he  selected  condemnation  commissioners  who  fixed  the  value 
of  parcels  purchased  by  the  city.  The  law  officer's  friends  were  interested 
in  the  sale  of  many  of  these  parcels. 

Other  politicians  made  speculative  purchases.  Some  of  them  bought  on 
slim  margins,  while  others  were  known  to  be  wealthy.  One  of  the  largest 
purchases  was  made  by  a  man  who  represented  a  powerful  politician  out 
of  the  country.  He  acquired  city  property  for  two  million  dollars.  The 
politician  was  also  a  large  stockholder  in  the  construction  company  which 
secured  a  large  share  of  the  profits  of  the  city's  underground  railroad  through 
a  contract  which  his  puppets  in  office  had  made  for  the  city. 

The  Sale  of  the  City  Hall  cleared  the  city  of  its  final  debt.  It  was  now 
without  a  dollar.  It  had  no  surplus,  debt,  or  capital,  and  its  only  assets 
were  prospective.  Its  sinking  fund  was  exhausted,  and  the  only  course  left 
to  redeem  itself  was,  in  the  future,  to  do  business  on  a  business  basis. 

The  taxpayers  were  willing  to  try  the  experiment. 


13 


A  VISTA  OF  MUNICIPAL  EXTRAVAGANCE 


A  building  for  MINOR  city  offices  that  cost  ten  million  dollars.     A  building  where  criminal 

justice  is  dispensed,  that  cost  three  million  dollars  and  must  be  TORN  DOWN.     A  headquarters 

for  the  Police  Department  that  cost  more  than  one  million  dollars  and  a  building  for  the  Health 

Depaxtment  lfiaac4  ^ojr  twice  a  fair  rental.    A  municipal  building  that  cost  $32,000,000. 

14 


CHAPTER  II 
THE  SLUMBERING  CITIZEN  AWAKES 

There  were  signs  of  awakening  responsibility  in  the  people  after  the 
sale  of  the  City  Hall.  The  situation  was  far  too  serious  to  admit  of  further 
trifling  by  a  public  that  was  once  indifferent.  The  full  extent  of  the  city's 
financial  disaster  was  now  becoming  known  and  the  public  was  beginning  to 
grasp  the  facts.  The  sale  of  the  city's  capitol  brought  a  fuller  realization 
of  the  tragedy. 

"We  ought  to  have  known  better,"  remarked  a  man  of  middle  age  as  he 
left  the  scene  of  the  auction.  "We  should  have  prevented  the  disaster  by 
jailing  some  of  those  responsible.  The  city  was  wronged  by  its  own  servants 
and  the  people  should  demand  prompt  and  proper  redress.  The  guilty  must 
be  punished." 

"I  fully  agree  with  you,"  responded  the  speaker's  companion,  mildly. 
"The  guilty  should  be  punished.  But  so  should  those  others  who,  through 
lack  of  public  zeal  or  personal  courage,  permitted  the  wrongs  to  be  perpetrated. 
They're  to  blame,  just  as  much  as  the  more  pernicious  culprits  who  betrayed 
the  public  trust  and  looted  the  public  treasury." 

"You  shock  me  by  your  accusation,"  exclaimed  the  first  speaker.  "How 
can  you  be  so  severe  on  the  citizens  whose  confidence  has  been  so  fearfully 
abused  ?" 

"That's  just  it,"  exclaimed  the  second  speaker,  sharply.  "There  would 
be  no  such  frightful  abuse  if  the  people  had  only  been  alive  to  their  true 
condition.  They  would  have  throttled  any  attempt  at  public  wrongdoing  on 
the  part  of  those  in  office  and  there  never  would  have  been  a  chance  for  so 
great  a  disaster.  The  people  are  particeps  criminis  under  the  law,  for  they 
heard  the  frequent  cry  of  'thief,'  but  were  too  absorbed  in  their  own  business 
to  heed  the  warning.  They  let  the  fugitives  escape,  and  others,  following  their 
successful  example,  went  and  did  likewise.  The  result  is  that  the  city  is 
bankrupt." 

"I  think  your  strictures  a  bit  severe,"  commented  the  first  speaker, 
reflectively,  "but  may  be  you  are  right.  At  any  rate,  we've  learned  our  lesson 
now  and  we've  got  to  make  the  best  of  it.  We've  got  to  get  together  and  pull 
ourselves  out  of  this  hole,  or  we'll  go  in  deeper  and  drown.  So  let's  begin 
right  now  and  I'll  do  my  share  if  you'll  show  me  the  way." 

The  first  speaker  was  a  well-to-do  merchant  who  had  been  earnestly 
engrossed  in  private  affairs  for  many  years.  He  had  amassed  a  fortune 
through  close  application  to  business.  His  sole  effort  at  active  citizenship 
in  these  years  consisted  of  hasty  visits  to  the  polls  on  election  day  and  voting 

15 


h  t>( 


« •; 


Ml 

_  ff 

■  i 


^  I  '1 


for  the  candidate  of  his  "choice" — the  choice  of  one  of  the  two  leading  political 
parties.  His  interest  went  no  further,  though  he  styled  himself  an  inde- 
pendent voter  and  prided  himself  on  his  bold  political  conduct. 

The  second  speaker  was  more  serious  in  his  duty  toward  the  city  and  its 
people.  He  was  an  active  social  worker  who  was  spending  his  own  small  for- 
tune to  help  those  in  actual  want.  His  life  was  devoted  to  the  genuine  welfare 
of  the  poor.  He  studied  the  broader  public  questions,  feeling  that  the  city's 
own  welfare  was  linked  with  that  of  its  poor.  His  opinion  on  this  point  was 
confirmed  by  private  investigation.  He  followed  the  course  of  public  events 
closely,  believing  that  an  end  to  the  debauchery  would  bring  relief  to  those 
whose  well-being  he  served. 

"While  we  are  about  it,  let  us  begin  right  at  the  beginning,"  suggested 
the  social  worker.  "In  the  first  place,  we're  too  simple  to  be  able  to  grasp 
all  the  facts  at  once,  so  we'd  better  go  slowly  and  pick  them  up  gradually 
and  with  great  care.  We  must  begin  by  learning  how  much  it  costs  to  con- 
duct the  city's  affairs,  and  then  find  out  why  it  costs  so  much  and  how 
much  of  this  money  was  properly  spent  and  how  much  wasted.  I  have  devoted 
some  time  to  a  study  of  these  questions  and  will  impart  whatever  information 
I  have  to  you,  if  you  are  willing  to  hear  it." 

"I  am  more  than  willing,"  responded  the  merchant.  "I  am  eager  and 
anxious  to  learn  it  all.  What  I  also  want  to  know  is  who  benefited  by  the 
public  waste  and  whether  the  waste  was  intentional  or  otherwise.  I  want 
to  be  able  to  establish  full  responsibility  for  the  city's  wrongs." 

"As  a  beginning,  then,  I  presume  you  know  that  it  cost  the  city  approxi- 
mately $200,000,000  for  annual  running  expenses,"  resumed  the  social 
worker.  "All  this,  with  the  exception  of  $50,000,000,  was  distributed  to  the 
heads  of  departments  for  administration  purposes.  Of  the  $50,000,000,  forty 
millions  were  devoted  to  maintaining  the  city's  credit  by  the  payment  of 
interest  on  its  bonds  and  $10,000,000  to  redeem  some  of  these  bonds.  This, 
of  course,  is  all  wiped  out  now.  There  are  no  bonds  to  be  redeemed  and 
no  interest  to  be  paid. 

"The  annual  budget  of  $200,000,000,  which  is  provided  from  the  tax  levy 
on  real  estate  (less  than  four  per  cent,  comes  out  of  personal  taxes),  means 
$40  for  every  man,  woman  and  child  in  the  community.  It  means  $200  a 
year  for  an  average  family  of  five." 

"This  is  a  novel  computation,"  commented  the  merchant.  "I  never 
figured  that  I  owed  the  city  anything  for  my  children." 

"Yours  is  simply  another  way  of  reckoning,"  responded  the  social  worker. 
"I  have  expressed  it  more  concretely.  The  money  is  raised  by  taxation,  and 
the  landlord  pays  the  taxes.  The  people  pay  the  landlord.  That's  the  simple 
A  B  C  of  the  matter.     The  public,  including  yourself,  pays  the  bills. 

"You  may  be  amazed  at  this  expenditure,  but  you  have  only  part  of  the 
figures.  The  excessive  cost  of  government  has  a  direct  bearing  on  the  social 
conditions  of  the  city's  poor,  and  I  have  analyzed  the  situation  from  that  point 

16 


i!^ 


of  view.  The  social  conditions  become  worse  as  the  cost  of  government 
increases  and  taxes  and  real  estate  assessments  mount  higher.  The  logic  of 
the  situation  is  that  where  the  taxes  on  property  increase,  the  rentals  must 
rise  to  cover  increased  taxation  and  to  yield  a  fair  return  on  the  investment 
Since  the  city's  failure,  there  has  been  a  sharp  decline  in  rental  values  and  a 
further  decrease  in  the  value  of  improved  property." 

"I  realize  the  force  of  your  argument  and  I  can  readily  see  how  you 
have  been  led  into  a  study  of  the  city's  financial  affairs,"  responded  the  mer- 
chant, warmly. 

"Instead  of  costing  the  city  $200,000,000  a  year,"  resumed  the  social 
worker,  "the  actual  cost  exceeds  $250,000,000." 

"Whew  I"  exclaimed  the  merchant.  "You  take  my  breath  away.  I  never 
dreamed  the  city  could  spend  that  much  money  in  a  single  year." 

"I'm  not  surprised  at  your  astonishment,"  resumed  the  merchant's  com- 
panion. "I  was  astonished  myself  when  I  first  learned  the  figures.  I  could 
scarcely  grasp  them  and  I  could  hardly  believe  they  were  true.  But  I  soon 
got  over  my  excitement  as  I  became  familiar  with  the  facts." 

The  merchant  gazed  in  wonder  at  his  companion.  They  were  standing 
near  the  towering  structure  by  the  side  of  the  City  Hall. 

"Those  extra  expenditures  above  $200,000,000  a  year  have  gone  for  pur- 
poses of  ^public  improvement,'"  pursued  the  social  worker.  "The  ground 
on  which  this  building  stands  costs  the  city  $6,000,000.  That  corner  there 
(pointing  to  the  south  end  of  the  structure)  was  once  a  small  triangular 
plot  on  which  an  old  ramshackle  building  stood.  The  city  paid  $1,500,000 
for  the  property  and  paid  it  cash.  It  paid  fancy  prices  for  every  parcel  in 
the  plot  and  in  some  cases  the  parcels  were  plastered  with  more  than  one 
fictitious  mortgage.  A  large  part  of  the  property  was  held  by  dummies  for 
politicians  and  no  amount  of  newspaper  exposure  could  check  the  lavish- 
ness  of  the  awards  paid  them.  The  city's  experts  appraised  the  parcels  at  a 
million  dollars  less  than  was  paid,  and  these  appraisals  were  regarded  as 
generous.     The  million  dollars  was  wasted  in  excess  awards. 

"One  of  the  parcels  at  the  north  end  of  the  plot  consisted  of  two  single 
lots  for  which  the  city  paid  close  to  $400,000,  including  interest.  This  prop- 
erty was  owned  by  an  estate  represented  by  a  distinguished  jurist  and  the 
difference  in  the  estimates  of  its  value  by  experts  for  the  property  owners, 
IS  amusing.  One  set  of  experts  swore  that  the  property  was  worth  $100,000 
and  a  few  months  later  another  set  swore  that  it  was  worth  five  times  that  sum. 
The  first  appraisal  was  made  for  purposes  of  taxation  by  the  State  after 
the  death  of  the  testator;  the  second  for  purposes  of  disposal  to  the  city." 

"How  interesting!     And  the  jurist  is  still  on  the  bench?"  asked  the  mer- 
chant. 

;'No,  he  is  now  THE  M^^  YOR  OF  THE  CITY,"  replied  the  social  worker. 

This  transaction  aptly  illustrates  how  the  city  has  disposed  of  a  large  part  of 

Jts  income  from  the  taxpayers.    It  is  typical  of  the  city's  generosity  in  acquir- 

17 


ing  more  than  $100,000,000  worth  of  land  in  the  past  ten  years.  These 
proceedings  have  made  a  great  many  persons  rich,  but  they  helped  to  make 
the  city  poor. 

"The  prices  at  which  the  purchases  were  madie  were  usually  fixed  by 
commissions  of  three  men,  appointed  by  the  courts,  at  the  suggestion  of  the 
dominant  politicians.  Nominally,  the  city  is  responsible  for  the  selection 
of  one  of  these  commissioners,  chosen  by  the  city's  own  law  officer,  but  as 
a  rule  the  selection  is  dictated  by  the  political  boss.  I  cite  the  case  of  this 
parcel  only  because  it  is  so  conspicuous.  There  are  other  cases  a  great  deal 
worse  and  we  will  come  to  them  later.  Every  citizen  knows  where  this 
property  is,  but  few  of  them  have  any  idea  what  it  cost  or  to  whom  the  money 
was  paid." 

"Your  story  is  certainly  illuminating,"  commented  the  merchant.  "I 
have  been  in  this  city  fifty  years,  from  the  day  I  was  born,  but  I  never 
knew  it  before.  The  truth  is,  I  didn't  know  the  city  was  buying  this  prop- 
erty until  I  saw  some  of  the  old  shanties  come  down  and  the  new  building 
go  up.  I  suppose  the  average  man  knew  about  as  much  as  I  did  about  this 
property." 

"I  thank  you  for  your  frankness,"  continued  the  social  worker.  "I  am 
not  surprised  at  what  you  say.  Your  story  is  simply  the  story  of  nine  out 
of  every  ten  men  in  the  city — and  I  don't  entirely  blame  them;  though,  as 
I  said  before,  they  are  in  a  large  measure  guilty  through  lack  of  public 
interest." 

"That's  where  all  the  trouble  lies.  Under  our  present  system  of  political 
management,  or  mismanagement,  if  you  choose  to  call  it,  the  citizens*  inter- 
est in  public  affairs  is  expressed  only  on  election  day.  The  politicians*  inter- 
est is  maintained  365  days  a  year  and  an  extra  day  in  leap  year.  That's  why 
he  is  successful  with  the  city's  affairs — for  his  own  profit.  But  that's  another 
story  and  we'll  take  the  politician  up  at  some  other  time  and  tell  all  about  his 
interesting  affairs." 

By  this  time  the  two  men  had  reached  the  comer  of  the  City  Hall  park 
and  were  standing  in  front  of  the  magnificent  marble  and  granite  structure 
across  the  street. 

"That,"  said  the  social  worker,  "is  where  the  city  keeps  part  of  its 
musty  old  records.  It  also  uses  the  building  for  several  of  its  minor  offices. 
I  sometimes  wish  that  the  poor  people  whom  I  meet  were  fortunate  enough 
to  be  ordinary  lifeless  objects  so  that  they  might  at  least  be  provided  with 
so  fine  a  home.  None  of  them,  I  assure  you,  can  boast  of  a  ten  million 
dollar  palace** 

"Good  gracious!*'  exclaimed  the  merchant.  "Is  that  what  that  building 
cost?" 

"It  is ;  and  no  one  knows  how  much  more,"  responded  the  social  worker. 
"The  records  are  not  kept  so  that  every  item  of  cost  in  the  building  can 
be  estimated.     The  cost  is  spread  over  a  dozen  years.     You  notice  those 

18 


heavy  bronze  doors  at  the  entrance?  They  cost  thousands  of  dollars.  You 
notice  those  heavy  granite  piles  at  the  sides  of  the  entrance?  They  are  only 
an  obstruction  on  the  sidewalk,  but  they  cost  many  thousands  more. 

"The  marble  and  onyx  floors  and  trimmings  inside  swell  the  cost  several 
hundred  thousand  dollars,  and  the  bronze  and  gold  chandeliers  throughout 
the  building  add  many  thousands  more.  They  are  of  unique  design  and  the 
casts  were  destroyed  after  each  chandelier  was  made.  Those  door  knobs 
that  you  see  cost  $100  each  and  those  desks,  chairs  and  other  furnishings 
in  the  building  are  worth  a  millionaire's  ransom.  But  the  city  paid  the  bills 
and  the  politicians  and  their  friends  got  the  money." 

"And  did  the  people  submit  to  all  these  extravagances  without  a  pro* 
test?"  asked  the  merchant,  incredulous. 

"They  did.  The  people  were  asleep  and  the  politicians  didn't  care.  A 
reform  administration  tried  to  check  the  extravagances,  but  the  check  was 
only  temporary  and  the  result  was  only  added  expense.  Two  sets  of  archi- 
tects were  engaged  on  the  job,  and  the  final  architects'  bills  were  not  paid 
until  a  few  months  ago,  twelve  years  after  the  building  was  begun.  The 
architects*  fees  were  half  a  million  dollars.  The  city  paid  $500,000  a  year 
interest  on  the  bonds.  This  sum  could  have  provided  a  building  of  sufficient 
size  and  grandeur  for  all  the  offices  in  the  ten  million  dollar  structure.  Five 
hundred  thousand  dollars  were  spent  for  metallic  filing  cabinets  and  many 
thousands  more  for  costly  oriental  rugs  for  the  feet  of  city  employes." 

The  two  citizens  wandered  up  the  wide  thoroughfare  through  which  the 
underground  railroad  runs.  It  was  the  noon  hour,  and  men  and  women  were 
hurrying  from  factories  and  workshops  to  their  luncheon.  The  city's  finan- 
cial disaster  made  little  difference  to  them  except,  perhaps,  that  their  burdens 
might  become  worse.  It  was  in  the  frame  of  mind  of  open  seekers  after 
the  truth  that  the  two  men  came  across  a  group  of  laborers  seated  on  the 
curb  in  front  of  a  factory  building.  It  was  like  gathering  wisdom  from 
children  what  these  two  men  learned  from  the  opinions  of  labor. 

"It's  a  fine  state  we're  in,"  said  a  thick-voiced  speaker  to  his  companion. 
"And  how  could  it  be  that  the  city  is  broke?  We  pay  our  rent,  the  land- 
lord pays  his  taxes,  and  when  we  come  around  to  the  park  with  the  kids  for 
a  little  fresh  air  on  Sunday,  we  find  the  benches  crowded  and  the  music 
still.  Why  don't  they  put  more  benches  in  the  park  and  let  the  kids  roll  on 
the  grass?" 

"But  you  forget,  Tom,"  said  another,  "that  the  city  is  big  and  great; 
that  we've  got  all  the  millionaires  in  the  world  here  and  that  everybody 
looks  up  and  envies  us.  A  good  deal  they  don't  know  what's  going  on,  but 
they're  learning  now  that  we're  broke.  Did  you  ever  hear  it  said  that  the 
place  for  a  young  man  to  be  is  in  the  city,  where  he  can  get  an  education 
and  grow  rich  and  powerful?  The  divil  a  bit  of  riches  we're  got  around  my 
way  where  the  old  lady  does  the  washin'  and  mendin'  for  neighbors  and  her 
own  work  besides.     My  twelve  dollars  a  week  don't  pay  for  three  measly 

19 


4: 


meals  a  day  for  the  two  kids  and  us.  I  wonder  what  it  would  buy  in  the 
country  where  I  came  from  fifteen  years  ago?" 

A  third  man  entered  the  discussion.  His  limbs  were  less  thawny  and 
his  face  pale. 

"There's  no  reason  why  we're  living  for  someone  else,"  explained  the 
speaker,  "except  that  we've  grown  up  that  way  and  we're  tied  down  to  it. 
We  can't  break  our  shackles  now  because  if  we  did  the  whole  'system' 
would  go  to  pieces  and  anarchy  would  follow.  I  once  heard  a  speaker  on  a 
street  corner  say  that  the  'system'  was  made  by  men  and  that  these  men 
ruled  the  earth.  But  I  don't  believe  that,  because  I  don't  believe  any  set  of 
men  would  be  willing  to  make  slaves  of  their  brothers  for  a  few  paltry  dollars. 
I  read  where  the  fortunes  of  these  rich  men  came  from,  and  while  it  is  true 
that  most  of  them  came  from  the  government  or  from  the  people  direct,  I  don't 
believe  that  these  men  really  knew  they  were  crushing  others  to  make  them- 
selves rich.  It  would  be  mean  to  say  that  and  you  know  we  must  take  our 
lot  as  we  find  it  and  be  charitable." 

The  merchant  and  his  companion  walked  along  in  silence  after  a  glance 
at  the  last  speaker.     It  was  the  merchant  who  spoke. 

"I  wonder  if  they  know  where  a  single  dollar  of  the  city's  money  went  ?" 
he  asked,  reflectively. 

"They  know  the  money  has  been  spent,"  replied  the  social  worker.  "They 
read  the  evening  papers  and  glance  at  what  they  see.  The  kind  of  news- 
papers they  read  gives  them  froth  and  funny  pictures  and  sounding  platitudes. 
That's  how  the  newspapers  'elevate'  their  readers.  The  newspapers  say  they 
give  the  people  what  they  want  and  they  give  them  trash  on  the  theory  that 
they  find  only  trash  in  the  reader's  head." 

The  two  citizens  passed  a  heavy  sombre  structure  where  criminal  justice 
is  dispensed. 

"This  building  cost  the  city  several  million  dollars,"  said  the  social 
worker.  "It  is  as  much  of  an  architectural  misfit  and  economic  blunder  as 
is  the  Record  building  we  just  passed.  It  was  designed  by  a  different  set 
of  political  architects.  Every  few  years  the  city  spends  thousands  of  dollars 
for  repairs  to  the  building  to  save  it  from  falling  into  the  subway.  It  has 
cost  more  than  $1,000,000  for  repairs  in  a  dozen  years  and  the  end  of  the 
expenditures  has  not  yet  beer  reached.  The  city  authorized  the  expenditure 
of  $2,000,000  for  a  new  building  just  prior  to  its  financial  collapse." 

After  a  few  minutes  the  two  men  came  to  an  imposing  granite  building, 
squat  in  stature,  and  long  in  reach.  They  had  passed  a  new  loft  building 
which  had  recently  been  leased  by  the  city  for  the  use  of  its  Health  Depart- 
ment. The  building  occupied  half  a  block  and  cost  less  than  $300,000.  The 
rental  paid  by  the  city  on  a  five  year  contract  exceeded  the  entire  cost  of 
the  property.  The  building  was  without  light  or  heat  at  the  beginning  of  the 
city's  occupancy,  and  the  city's  employes  were  greatly  inconvenienced  in 
spite  of  the  "experts"  on  the  city's  health  who  filled  the  department. 

20 


The  centre  of  the  imposing  granite  structure  was  surmounted  with  a 
lofty  dome,  while  both  ends  were  decorative  but  low.  There  was  a  granite 
archway  at  the  north  end  of  the  building  where  city  automobiles  were  wait- 
ing. Newspaper  reporters  ran  to  and  fro  in  the  building  and  gave  the 
impression  of  high  importance  to  their  work.  There  had  been  a  change  in 
the  executive  head  of  the  department,  the  headquarters  of  which  was  in  that 
building,  and  the  activity  of  the  reporters  seemed  to  indicate  that  an  edict 
of  importance  had  been  handed  down.  Instead  of  that,  it  was  only  the  vapid 
utterances  of  an  arrogant  and  incompetent  official. 

"This  is  the  home  of  the  police  force,"  explained  the  social  worker.  "It's 
another  granite  and  marble  pile  that  cost  more  than  a  million  dollars  and  is 
worth  a  good  deal  less.  Like  the  other  buildings  we  just  passed,  the  per- 
centage of  waste  is  enormous.  The  structure  was  built  by  two  young  men 
with  political  pull  and  the  job  was  muddled  through  the  failure  of  the  con- 
tractors. You  see  that  end  where  the  automobiles  stand?  That  caved  in 
before  the  building  was  finished  through  lack  of  proper  support.  There 
is  an  $80,000  electric  plant  in  the  basement  of  this  building  which  has  not 
been  used  and  the  story  of  this  neglect  will  form  an  interesting  part  of  another 
chapter  of  our  discussion. 

"All  the  money  you  have  seen  thus  far  spent  for  public  buildings,  was 
paid  out  of  the  'extra'  funds  not 'included  in  the  annual  budget.  Interest 
on  these  sums  was  paid  annually,  and  it  was  to  pay  off  bonds  issued  for 
purposes  like  these,  that  the  city  had  to  part  with  its  last  precious  parcel 
to  clear  itself  of  debt.  That's  the  way  the  city  was  managed.  While  the 
public  debt  was  rising,  no  one  cared  how  high  it  went  or  what  became  of 
the  money. 

"It  was  not  until  taxes  became  so  great  a  few  years  before  the  failure 
that  the  public  protiest  was  heard.  It  was  realized  that  the  city  was  nearing 
a  financial  crisis.  It  was  then  too  late.  The  city  had  already  purchased 
private  water  plants  and  broken  water  mains  at  fabulous  prices.  It  squan- 
dered millions  on  land  owned  by  politicians  in  thfe  watershed  and  in  the 
city,  and  it  spent  millions  for  docks  and  other  purposes  devised  by  private 
interests  for  their  own  profit.  It  squandered  vast  sums  on  useless  public 
projects. 

"While  the  public  debt  was  rising,  no  one  seemed  to  care,  and  under  the 
spur  of  official  recklessness,  the  city's  debt  doubled  in  a  few  years.  Taxa- 
tion grew  from  one  cent  and  a  half  on  a  fifty  per  cent,  valuation  basis,  to 
two  per  cent,  on  full  valuation.  Under  the  State  Constitution,  taxes  could 
go  no  higher. 

"AND  THE  PEOPLE  PAID  ALL  THESE  PROFITS,  NOT 
BECAUSE  THEY  WANTED  TO,  BUT  ONLY  BECAUSE  THEY  WERE 
ASLEEP  AND  BECAUSE  THEY  DIDN'T  KNOW  WHAT  THEIR 
FAITHLESS  PUBLIC  OFFICIALS  WERE  DOING." 


21 


i 


THE  CITY'S  $35,000  IRON  FENCE 


^m 


^"Jiiipn 


:   !»!i«ltri.'| 


J  J  i: 


.i,»!<»*^ 


To  k'eep   the  poor  off  their  own   grass.     A  new   Six   Million   Dollar   Street,    created   as  the 

approach  to  a  profitless  $20,000,000  bridge.     Some  parcels  of  property  along  this  street  were 

purchased  by  agents  of  conspicuous  politicians  and  sold  to  the  city  at  exorbitant  prices. 


22 


CHAPTER  III 
COUNTING  THE  COST  OF  CITY  MISMANAGEMENT 

The  course  of  the  two  citizens  now  changed  to  another  direction.  They 
had  gone  less  than  a  mile  in  their  walk  from  the  City  Hall  and  already  ac- 
counted for  a  large  part  of  the  city  debt.  They  passed  through  a  street  that 
was  newly  created  for  the  bed  of  the  underground  railroad  and  they  crossed 
another  street  that  was  opened  as  the  approach  to  a  new  municipal  bridge. 
Four  blocks  of  this  street  were  named  in  memory  of  the  mother  of  a  noted 
politician  who  made  large  profits  out  of  the  city  by  the  opening. 

More  than  $15,000,000  of  the  people's  money  was  spent  for  these  new 
highways.  It  was  urged  on  the  public  when  the  streets  were  proposed,  that 
the  benefitted  property  owners  would  pay  for  the  improvements.  But  with 
the  aid  of  cunning  lawyers  and  astute  politicians,  the  property  owners  were 
able  to  shift  the  burden  of  cost  on  the  city  at  large.  The  $15,000,000  were 
added  to  the  public  debt  and  the  people  paid  principal  and  interest. 

"I  won't  burden  you  with  too  much  information  in  one  day,"  said  the 
social  worker  to  his  companion.  "Your  education  should  be  gradual  so  that 
you  may  remember  the  facts  as  you  learn  them.  My  own  information  is  by 
no  means  complete." 

"I  am  beginning  to  realize  the  task  of  tracing  the  public  debt,"  responded 
the  merchant.  "I  had  no  idea  the  job  was  so  terrific.  But  I  intend  to  learn 
the  facts  at  any  cost  and  will  follow  the  trail  to  the  end.  I  want  to  know  all 
there  is  to  be  known  about  the  city's  affairs  and  I  want  to  make  it  known  to 
everyone  else.  The  time  has  come  when  the  citizens  must  take  the  situation 
into  their  own  hands  and  govern  the  city  for  the  public  good." 

"I  will  continue  with  this  lesson  as  far  as  I  can,"  resumed  the  social 
worker,  "and  when  I  have  finished  I  will  make  you  acquainted  with  a  friend 
of  mine  who  knows  more  of  the  facts.  His  knowledge  is  first  hand,  for  he 
has  investigated  and  exposed  a  great  deal  of  the  public  wrong.  He  is  a  young 
reporter  who  has  done  the  leading  exposure  work  in  this  city  in  recent  years ; 
and  his  courage  is  commanding." 

"Such  a  person  is  of  precious  importance  to  the  people  of  this  city  at 
this  time,"  declared  the  merchant.  "We  must  seek  him  out  for  guidance  as 
well  as  for  information.  His  years  of  labor  must  have  fully  equipped  him  for 
the  situation  that  is  now  at  hand." 

"We  have  accounted  for  something  like  $50,000,000  of  the  city's  debt 
contracted  on  only  a  few  items,"  resumed  the  social  worker.     "There  are 

23 


ltd 


$750,000,000  more  of  debt  to  be  accounted  for.  In  the  first  place,  we  must 
not  assume  that  all  this  money  was  unnecessarily  spent  or  recklessly  wasted, 
but  we  are  safe  in  assuming  that  a  large  part  of  it  was  deliberately  misapplied; 
and  we  can  estimate  the  waste  on  what  we  have  already  reviewed. 

"Of  the  $10,000,000  spent  for  the  granite  and  marble  Record  building, 
half  was  misspent.  The  expenditures  were  not  made  with  a  view  to  furnishing 
a  safe  and  commodious  office  building  for  public  use,  but  solely  with  an  eye 
to  the  most  reckless  extravagance.  Otherwise  there  would  be  no  solid  brass 
trimmings  or  heavy  bronze  doors  where  cheaper  and  as  serviceable  material 
might  be  used ;  nor  would  there  be  marble  bases  for  rich  mahogany  chairs  and 
desks  such  as  might  be  used  but  are  not  in  the  home  of  the  richest  banking 
syndicate.  Neither  would  there  be  gold  filled  chandeliers  to  waste  their 
splendor  in  the  air. 

"History  and  private  information  supply  the  names  of  half  a  .dozen  men 
who  derived  vast  illegitimate  profits  from  the  construction  of  this  building  and 
from  the  purchase  of  its  supplies  and  equipment.  I  might  say  a  great  deal 
more  about  the  scandalous  cost  of  various  items  in  the  building  and  about  its 
expensive  jobbery,  but  it  seems  hardly  necessary  to  do  so  in  view  of  the  fact 
that  there  is  so  much  else  of  municipal  mischief  to  learn.  Suffice  it  to  say  that 
the  waste  on  this  building  is  only  illustrative  of  similar  waste  on  other  large 
municipal  structures. 

"Of  the  $15,000,000  expended  for  new  streets,  half  was  wasted.  The 
opening  of  these  new  streets  added  millions  to  the  aggregate  wealth  of  a  hand- 
ful of  grasping  politicians.  They  bought  a  large  part  of  the  property  needed 
by  the  city  and  reaped  large  profits  from  their  enterprise.  They  themselves 
fixed  the  price  the  city  paid  for  their  parcels  through  subservient  condemnation 
commissioners. 

"One  of  the  politicians  who  profited  handsomely  from  the  first  proceeding 
whereby  property  was  acquired  for  the  subway  street,  was  a  lawyer  who  was 
afterward  elevated  to  the  judiciary  as  a  reward  for  his  valiant  services  to  the 
coterie.  His  conduct  as  a  judge  has  since  been  questioned.  Another  distin- 
guished citizen  who  profitted  handsomely  with  the  judge  in  the  first  proceeding 
that  cost  the  taxpayers  $8,000,000,  became  a  conspicuous  figure  in  society 
thereafter.  Others  who  became  rich  at  the  city's  expense  in  this  proceeding 
have  since  passed  out  of  political  power. 

"The  opening  of  the  new  street  for  the  bridge  cost  the  city  over  $6,000,000. 
A  large  part  of  this  sum  was  paid  to  the  representatives  of  politicians  conspicu- 
ous in  that  section  of  the  city.  One  agent  of  this  political  group  profitted  to 
the  extent  of  $60,000.  He  afterward  became  a  city  alderman.  The  gain  of 
other  agents  was  almost  as  large.  The  profits  were  certain  just  as  in  the 
former  proceedings,  for  the  politicians  knew  in  advance  what  property  the 
city  would  buy  and  how  much  it  would  be  likely  to  pay.  They  made  their 
price  accordingly.  Some  of  the  parcels  they  purchased  which  were  originally 
of  small  value,  were  changed  into  valuable  comers  by  the  cutting  through  of 
the  new  street." 

24 


"I  don't  wonder  these  politicians  are  immensely  rich,"  commented  the 
merchant.  "With  that  sort  of  information  always  in  their  possession  I  don't 
see  how  they  could  help  getting  rich  even  without  other  advantages." 

"In  addition  to  what  they  received  from  the  city,  their  profits  were  great 
in  other  directions  as  a  result  of  this  improvement,"  continued  the  social 
worker.  "They  sold  their  corner  parcels  for  a  great  deal  more  than  they  paid 
for  them,  and  promptly  turned  the  money  over  in  other  investments  with 
the  city." 

"Your  knowledge  of  the  inside  of  these  affairs  is  amazing,"  exclaimed 
the  merchant.  "You  seem  possessed  of  more  information  than  even  the  city's 
own  officials." 

"That  is  only  an  impression,"  replied  the  social  worker.  "What  I  know 
I  have  learned  largely  from  my  young  friend.  I  supplemented  his  information 
with  some  of  my  own;  but  with  all  that  I  know  and  with  all  that  he  knows, 
we  know  a  great  deal  less  than  the  city  officials  knew  when  they  spent  this 
money.  You  know  that  since  the  city  became  a  composite  of  five  separate 
communities,  control  of  its  finances  has  rested  in  the  hands  of  a  certain 
elective  group.  That  board  is  responsible  for  every  expenditure  made  by  the 
city.  Every  member  of  that  board  is  supposed  to  know  for  what  purpose 
every  dollar  of  the  city's  money  is  spent.  He  is  supposed  to  know  whether  the 
price  paid  for  a  needed  article  is  reasonable  or  excessive,  or  if  the  amount 
of  a  contract  is  warranted  or  unfair." 

"Then  if  the  expenditure  of  all  this  money  was  so  closely  guarded  and 
if  the  board  sits  in  open  session  on  all  things,  how  is  it  that  the  city's  money 
could  be  so  recklessly  misspent  and  not  an  effort  made  to  stop  it,"  asked  the 
merchant  stubbornly. 

"There  were  efforts  made  to  stop  some  of  the  expenditures,"  replied  the 
social  worker.  "Some  of  these  efforts  succeeded.  But  for  every  EFFORT 
made  to  stop  a  wasted  dollar,  a  hundred  dollars  were  WASTED  without 
public  knowledge.  While  the  work  of  the  board  was  supposed  to  be  public, 
a  large  part  of  it  was  behind  closed  doors.  It  was  in  these  secret  meetings 
that  extravagances  were  planned  for  private  profit;  and  it  was  in  public 
sittings,  with  the  public  eye  shut  that  these  compacts  were  brazenly  carried 
out.     Impudence  and  deceit  became  the  badge  of  bold  political  conduct. 

"It  was  through  manipulations  such  as  these  that  the  public  was  deprived 
of  most  of  its  franchise  property  rights,  and  it  was  through  manuevres  of  a 
similar  nature  that  the  public  money  was  improperly  voted  and  the  city's 
future  pledged.  The  franchises  are  worth  millions  of  dollars  and  each  year 
adds  only  to  their  value.  The  income  from  half  of  them  would  alone  defray 
the  cost  of  city  government,  but  of  course  they  are  now  virtually  out  of  the 
city's  reach." 

"But  the  newspapers  were  represented  at  these  meetings  of  the  city 
council,  were  they  not?"  persisted  the  merchant. 

They  were;  but  the  newspapers  do  not  always  do  their  duty,  nor  do 

25 


w 


m 


H 


I 


they  always  know  what  secret  program  is  carried  on.  They  are  represented 
by  men  most  of  whom  have  their  own  petty  interests  to  serve  and  who  serve 
them  at  the  expense  of  the  general  public.  I  regret  to  say  that  my  own 
experience  has  shown  that  many  of  these  newspaper  representatives  in  places 
of  public  importance,  are  weak  in  their  public  duty,  and  ethically  unfit. 

"This  brings  us  to  the  point  that  I  want  to  permanently  impress  on  your 
mind,  and  that  is,  that  the  public  funds  were  not  innocently  misspent,  but 
were  recklessly  wasted  by  responsible  public  officials.  Sometimes  the  money 
was  voted  under  false  pretext  and  at  other  times  silence  was  purchased. 
Public  betrayal  was  at  all  times  the  purpose  intended.  We  will  return  to  this 
point  at  another  time  when  my  friend  will  make  clear  some  acts  of  official 
infidelity  and  misconduct  that  have  recently  come  under  his  observation." 

The  two  citizens  were  now  on  the  new  street  that  cost  $6,000,000.  They 
approached  the  crossing  under  the  elevated  structure  where  a  group  of  persons 
had  gathered  around  a  tenement  stoop.  A  young  woman  was  ill  and  they 
were  ministering  to  her  care.  The  mother  of  the  girl,  a  frail  little  woman, 
held  her  daughter's  head  in  her  lap. 

"My  child!  My  Fanny!"  she  sobbed.  "Something  to  eat!  Something 
to  eat !"  ^ 

The  spectators  brought  food  which  was  given  to  the  girl,  while  the 
mother  tried  to  make  her  comfortable.  The  two  finally  started  off,  the  girl 
leaning  on  her  mother's  shoulder. 

"These  conditions  are  common  in  this  quarter,"  explained  the  social 
worker  as  they  followed  the  feeble  pair.  "The  girl  fainted  for  lack  of  food. 
I  think  it  would  be  well  to  inquire  into  the  condition  of  her  family,  so  you 
will  know  first  hand  how  the  city  takes  care  of  its  own  people,  especially  the 
poor." 

The  two  followed  the  pair  to  their  home  a  few  doors  away.  Ragged 
children  ran  to  and  fro  under  the  elevated  structure.  One  boy  of  eleven  ran 
into  a  girl  of  four  and  threw  her  under  the  feet  of  the  merchant.  Another 
threw  a  stick  that  cracked  a  store  window.  But  the  play  of  the  children  was 
undisturbed,  for  their  only  playground  was  the  street  and  the  neighborhood 
recognized  the  social  wants  of  the  little  ones. 

The  entrance  to  the  house  in  which  the  sick  girl  lived  was  blocked  by  a 
heap  of  furniture  piled  on  the  sidewalk.  The  furniture  was  surrounded  by 
a  group  of  women,  one  of  whom  held  a  tin  cup  in  her  hand.  She  was  solicit- 
ing alms  from  sympathetic  strangers.  Contributions  were  mostly  in  pennies. 
The  social  worker  dropped  a  piece  of  shining  silver  into  the  cup  and  learned 
from  the  woman  the  cause  of  the  girl's  misfortune.  He  also  learned  the 
pathetic  story  of  the  family  that  had  been  evicted. 

The  girl  was  out  of  employment  for  weeks.  She  worked  on  women's 
apparel  and  there  was  a  disturbance  in  the  trade  that  closed  the  shops.  The 
workers  demanded  more  pay.  Their  demands  were  refused.  Their  years  of 
toil  they  protested,  had  brought  them  only  greater  hardships  and  the  cost  of 

26 


living  had  advanced  beyond  their  means.  The  strikers  were  aided  by  a  group 
of  women  advanced  in  political  thought,  but  their  aid  was  ineffectual.  The 
bosses  spurned  their  efforts  at  intervention.  The  young  woman  had  reached 
the  limit  of  her  endurance  from  hunger  and  exhaustion,  when  she  collapsed. 
"I  have  never  seen  this  side  of  the  industrial  struggle,"  said  the  merchant 
feelingly,  "and  I  hope  I  never  have  to  see  it  again.  I  am  almost  sorry  I  saw  it 
now.  I  never  believed  that  starvation  could  actually  overtake  the  workers 
engaged  in  an  industrial  quarrel.  I  always  felt  that  the  picture  of  suffering 
was  largely  overdrawn  in  order  to  win  aid  and  sympathy  for  the  strikers." 

The  merchant  followed  the  young  woman  into  the  tenement,  while  the 
social  worker  gathered  the  story  of  the  evicted  family  from  the  almstaker. 
There  were  father,  mother  and  four  children,  the  oldest  a  boy  of  thirteen. 
The  father  had  deserted  his  family  and  the  boy  was  an  inmate  in  the  city's 
institution  for  juvenile  delinquents.  He  was  arrested  as  a  pickpocket,  in  the 
company  of  boys  who  were  known  to  ply  that  trade  and  was  sentenced  to  a 
lerm  in  the  reformatory. 

"My  boy  is  honest,"  the  mother  pleaded  to  the  judge.  She  explained  that 
his  support  was  needed  to  help  the  family.  "He  peddles  candy  in  the  park  and 
vegetables  in  the  street,"  she  added. 

"But  he  will  become  a  burglar  and  a  thief  if  he  doesn't  stay  away  from 
the  g^ng,"  the  magistrate  replied  and  the  lad  was  sent  away.  The  city  was 
paying  25  cents  a  day  for  his  maintenance  and  care  and  the  boy's  mother  was 
left  to  struggle  with  her  brood.  The  family's  savings  were  gone,  their  credit 
exhausted,  and  struggle  as  she  might,  there  was  no  way  of  meeting  the  needs 
of  her  little  ones.  Organized  charity  was  penurious  in  its  aid  to  families 
whose  natural  breadwinners  were  alive. 

"Now  that  you  have  learned  the  misfortune  of  at  least  two  families  in  this 
vicinity,  I  want  to  call  your  attention  to  a  piece  of  extravagance  out  of  all 
harmony  with  the  prospect  that  this  section  affords,"  resumed  the  social 
worker  when  he  was  joined  by  his  companion.  "The  city  laid  out  the  middle 
of  this  $6,000,000  street  as  a  parkway,  with  a  path  between  the  grass  plots. 
It  was  expected  that  the  parkway  would  afford  a  breathing  and  resting  spot 
for  the  tired  poor  in  the  vicinity.  The  parkway  was  welcomed  by  the  people. 
But  what  has  happened? 

"The  grass  plots  were  surrounded  with  lofty  iron  fences,  handsomely 
wrought  and  of  exquisite  workmanship,  and  the  people  are  cut  off  from  a  seat 
in  the  park !  The  walks  between  the  grass  plots  are  too  narrow  for  benches  or 
to  permit  even  a  handful  of  persons  to  pass  through  at  the  same  time.  And 
they  taxed  the  property  owners  $35,000  for  this  fence  to  keep  the  poor  off  their 
own  grass!" 

"I  can  scarcely  credit  such  stupidity!"  exclaimed  the  merchant  angrily. 
"If  they  wanted  to  provide  a  $35,000  contract  why  didn't  they  do  it  in  some 
other  way?  Such  folly  only  adds  further  injury  to  the  misfortunes  of  those 
Upon  whom  so  many  wrongs  have  already  been  inflicted." 

(  27 


.1 


«1 


<n 


The  merchant  and  his  companion  came  to  a  small  park  a  few  blocks 
from  the  new  street,  the  ground  for  which  had  been  acquired  through  con- 
demnation for  more  than  $1,000,000.  The  city  paid  exorbitantly  for  parcels 
held  by  politicians  and  their  undisclosed  agents.  One  side  of  the  park  was  a 
market  place  and  on  the  other  was  a  tall  school  house  of  modern  design  and 
equipment.  The  children  poured  from  the  entrance  of  the  school  and 
thronged  the  market  place,  crowding  the  merchants  and  their  customers 
almost  out  of  the  street.     School  was  over  for  the  day. 

"This  sight  reminds  me  of  the  bible,"  observed  the  merchant,  surveying 
the  caravan  of  carts  and  the  hord  of  frolicing  little  ones.  "There,  poverty 
is  blessed.  I  wish  it  were  in  that  happy  state  here,  for  the  bible  would  then 
be  my  text  in  this  as  in  other  things." 

A  person  of  official  bearing  passed  in  front  of  the  merchant  and  ap- 
proached a  slim,  blackbearded  peddler  at  his  cart.  The  latter  shrank  in  fear. 
The  official  flourished  a  soiled  bit  of  paper  threateningly. 

"Why'd  you  make  this  complaint?"  he  demanded  gruffly. 

The  peddler  was  too  frightened  to  reply. 

T— I  no  make  complaint,"  he  sputtered.     "I— I  tell  my  frent." 
Who's  your  friend?    What'd  yer  tell  him?"  the  official  demanded. 

The  peddler  was  mute  with  terror.  He  shrank  from  his  tormentor  who 
ordered  his  cart  seized  and  himself  placed  under  arrest.  The  cart  was  lifted 
into  a  truck,  half  the  goods  dumped  into  the  street  and  the  peddler  was 
dragged  off  with  the  aid  of  a  policeman.  A  few  days  later  the  peddler  re- 
turned to  the  market  place,  without  a  word  of  complaint  or  criticism.  He 
borrowed  a  few  dollars  to  redeem  his  cart  from  the  encumbrance  yard  and 
to  purchase  a  new  stock  of  wares. 

"What  terrible  injustice!"  exclaimed  the  merchant  when  he  saw  the 
peddler  dragged  off.  "I  never  dreamed  such  cruelty  could  be  inflicted  on  so 
helpless  a  people  in  a  free  country." 

"I'm  glad  you  witnessed  this  scene,"  responded  the  social  worker.  "The 
hardship  of  the  peddler's  life  is  a  blot  on  the  humanity  of  this  great  city. 
There  are  ten  thousand  of  these  poor  fellows  ekeing  out  a  bare  existence 
for  their  families.  Sometimes  the  women  and  children  aid  them.  Yet  even 
these  were  the  prey  of  petty  politicians  who  parcelled  out  market  privileges 
for  their  own  profit. 

"I  was  down  in  the  financial  district  a  few  days  ago,  and  what  I  saw 
there  made  me  hate  this  government.  I  saw  policemen  on  sleek  and  well  fed 
horses,  riding  down  peddlers  like  wild  animals.  In  sight  of  all  those  millions 
piled  up  daily  in  the  money  mart,  life  was  made  a  torment  and  a  burden  to 
those  who  had  the  temerity  and  the  misfortune  to  traffic  only  in  pennies." 

The  two  men  strolled  from  the  market  place.    It  was  now  growing  dark. 

"I  think  I  have  seen  enough  of  human  wretchedness  in  one  day  to 
satisfy  me  for  all  time,"  sighed  the  merchant  as  they  left  the  scene.  "These 
sights   would  haunt   me   forever   if  I   followed   them   closer.     WE   HAVE 

28 


REACHED  THAT  STAGE  IN  HUMAN  EXISTENCE.  WHERE  THE 
GREED  FOR  PERSONAL  GAIN  HAS  CRUSHED  OUT  EVERY  OTHER 
INSTINCT.  I  PLACE  MY  FAITH  IN  THE  MITIGATION  OF  HUMAN 
HARDSHIP,  IN  THE  BRIGHT  FACES  OF  THOSE  LITTLE  ONES 
WE  SAW  COMING  OUT  OF  THE  SCHOOL  HOUSE.  I  HOPE  THE 
FUTURE  WILL  BRING  FORTH  A  RACE  OF  BETTER  MEN,  WHO 
WILL  FEEL  FOR  THEIR  FELLOW  BEINGS  AS  THEY  DO  FOR 
THEMSELVES.' 


ft 


2» 


I* 


THE  TWO  MILLION  DOLLAR  COURT  HOUSE 


•  4 


which  resembles  a  fortress  without  a  cannon.     "The  corruption  of  the  city  seems  to  be 
ironically  expressed  in  the  cost  of  its  judicial  temples." 


30 


CHAPTER  IV 
VIEWING  THE  GRAFT  WITH  THE  REPORTER 

The  following  day  the  merchant  was  visited  at  his  office  by  the  yotmg 
reporter  referred  to  by  the  social  worker.  The  reporter  had  closely  followed 
the  trail  of  official  wrong  doing  in  the  city  in  recent  years,  and  he  was  ready 
to  lay  the  facts  before  citizens  interested  in  a  proper  redemption  of  the  city. 

"I  just  had  an  experience  that  taught  me  more  about  one  phase  of  public 
affairs  than  I  ever  expected  to  learn  in  so  short  a  time,"  remarked  the  mer- 
chant to  his  new  friend.  "I  have  not  yet  decided  in  what  spirit  to  accept  this 
new  information.  I  was  on  my  way  downtown  last  night,  along  the  west 
side,  when  I  walked  into  what  seemed  to  be  a  riot  of  no  small  proportion. 
The  police  were  engaged  in  a  violent  struggle  with  some  young  rowdies  who 
resisted  arrest. 

"I  followed  the  crowd  to  the  station  house  and  learned  from  the  chief 
of  the  raiding  squad,  a  swagger  young  fellow,  that  the  prisoners  had  ter- 
rorized the  neighborhood  and  that  one  of  them  had  shot  an  unoffending 
citizen  a  few  days  previous.  The  raiders  had  been  ordered  to  break  up  the 
gang. 

"When  I  reached  the  station  house,  some  of  the  crowd  tried  to  rescue  the 
prisoners,  but  were  repulsed  and  beaten  back.  One  of  the  prisoners,  a  mere 
boy,  was  badly  injured  in  the  mixup.  His  face  and  head  were  cut  and  his 
clothes  torn.  The  mother  of  the  prisoner  was  in  the  rescuing  party,  and  she 
too,  was  roughly  handled. 

*T  don't  know  what  happened  after  that,  but  I  couldn't  help  feeling  as 
I  went  home,  that  the  police  had  done  their  duty  and  that  they  were  at  last 
aroused  to  the  gang  peril  of  the  city.  I  showed  my  appreciation  of  the  work 
of  the  raiders  by  writing  a  letter  to  the  head  of  the  police  force  commending 
their  courage  and  recommending  their  advancement.  The  commissioner  re- 
ceived my  letter,  for  I  just  came  from  his  office." 

*T  suppose  he  congratulated  you  on  your  civic  spirit  and  on  your  interest 
in  the  work  of  his  department?"  suggested  the  reporter. 

"He  did.  But  I  went  there  not  to  accept  his  congratulations,  but  for  an 
entirely  different  purpose,"  resumed  the  merchant.  "I  went  there  to  protest 
against  the  conduct  of  his  chief  raider  this  morning." 

"What;  didn't  you  approve  of  his  courage  last  night?" 

"I  did,  but  I  strongly  disapproved  of  his  brutality  this  morning,"  re- 
sponded the  merchant  warmly.  "And  I  intend  to  express  my  disapproval  in 
a  more  emphatic  manner.  I  followed  the  prisoners  into  court  this  morning 
to  see  how  far  the  magistrate  would  uphold  the  work  of  the  police  last  night. 
I  found  that  he  sustained  them  nobly.  He  accepted  every  charge  made 
against  the  prisoners,  even  one  of  assault  and  attempted  murder  against  the 

31 


t^ 


1 


boy  who  had  been  so  roughly  handled.  The  lad  was  charged  with  shooting 
the  unoffending  citizen  and  with  assaulting  the  chief  raider,  and  was  held 
without  bail,  for  trial. 

"The  boy's  mother  pleaded  for  him,  and  when  her  plea  failed  to  move 
the  judge,  she  waited  outside  for  the  chief  raider  who  was  the  boy's  only 
accuser.  The  woman  begged  him  to  withdraw  the  charge.  She  protested 
that  the  boy  was  innocent,  that  he  was  in  no  way  responsible  for  the  shooting, 
and  that  the  police  had  arrested  him  wrongly. 

**My  boy  was  at  work  downtown  when  the  shooting  occurred,"  she  ex- 
plained. "He's  a  good  boy  and  stays  home  nights  with  me.  He  went  out 
last  night  for  a  little  air  only  a  few  minutes  before  he  was  arrested." 

"That's  enough  gab,  you  old  witch,"  retorted  the  officer,  as  he  shoved  the 
woman  aside.    "Go  home  and  shut  up." 

"The  woman  continued  her  pleading,  and  when  she  persisted  that  the  boy 
was  innocent,  the  officer  struck  her  in  the  face  and  knocked  her  down. 

"  *Shame  !*  I  cried.  I  started  to  raise  the  woman,  and  in  return  for  my 
interference  received  a  blow  on  the  head.  I  was  too  dazed  to  reply,  and 
when  I  recovered  I  found  myself  a  prisoner  in  the  hands  of  the  chief  officer 
and  his  men.  I  had  interfered  with  an  officer  in  the  discharge  of  his  duty, 
I  was  told,  and  was  to  be  punished.  I  was  dragged  back  into  the  courtroom, 
and  on  the  testimony  of  the  officer  and  his  men  I  was  fined  by  the  magistrate. 
I  never  dreamed  that  such  an  outrage  could  be  committed  on  an  intelligent 
and  law-abiding  citizen  in  a  free  and  civilized  community. 

"I  took  pains  to  investigate  the  woman's  story  after  my  release  from 
court,  and  I  found  that  what  she  said  was  true.  The  rowdies  who  did  the 
shooting  are  members  of  a  gang  who  indulge  in  midday  target  practice  in  an 
open  lot  where  the  rioting  took  place.  One  of  the  gang  spied  a  citizen  standing 
at  an  open  window  in  his  factory  across  the  street,  and  in  a  moment  of 
heedless  deviltry,  aimed  his  revolver  at  him.  The  bullet  hit  the  mark,  and 
the  victim  came  within  an  ace  of  losing  his  life.  He  spent  several  days  in 
a  hospital,  where  the  bullet  was  extracted  within  an  inch  of  the  heart.  The 
rowdies  have  not  been  interfered  with  nor  is  their  perilous  practice  stopped. 
They  are  on  intimate  terms  with  the  politicians  in  the  district,  and  their 
services  are  needed  on  election  day." 

'Have  you  learned  the  identity  of  the  chief  raider?"  asked  the  reporter. 

'I  have.  I  learned  that  he  is  the  confidential  'business'  agent  of  one 
of  the  ranking  officials  in  the  department,  and  that  he  was  selected  for  the 
special  task  of  gang  routing  in  order  that  he  might  win  personal  recognition 
from  the  mayor.  That  recognition  has  already  been  bestowed,  for  the  chief 
raider  and  his  squad  were  promoted  this  morning  on  the  strength  of  news- 
paper articles  and  on  the  department's  own  report.  My  own  recommendation 
was  used  to  aid  their  advancement." 

"That's  where  you  are  the  victim  of  your  own  good  citizenship,"  com- 
mented the  reporter,  lightly.  "I  suppose,  however,  that  the  commissioner 
accepted  your  complaint  and  will  punish  the  offender  for  his  conduct." 

"That's  the  point  that  bothers  me  now,"  responded  the  merchant.  "Not 
only  was  my  complaint  rejected,  but  my  own  letter  was  thrust  into  my  face 
as  commending  the  conduct  of  my  own  assailant." 


«i 


"1 


The  reporter  gave  a  hearty  laugh  as  he  and  the  merchant  left  the  latter's 
office  and  proceeded  up  the  west  side  of  the  city  to  the  Drive  which  stretches 
along  the  waterfront. 

"This  Drive  was  extended  three  miles  at  the  upper  end,"  explained  the 
reporter,  "and  the  'improvement'  cost  the  people  $6,000,000.  This  money  was 
expended  by  an  official  who  was  afterward  removed  from  office.  So  ob- 
stinate was  he  when  his  removal  was  ordered  by  the  city's  chief  executive 
on  the  ground  of  malfeasance,  that  he  had  himself  reinstated  in  his  position 
by  the  local  municipal  assembly,  controlled  by  the  political  boss.  It  was  an 
act  of  effrontery  that  staggered  the  entire  city,  but  the  power  of  politics 
prevailed  and  public  protest  was  unavailing.  The  Governor  of  the  State  finally 
dismissed  the  impudent  official  after  a  hearing,  and  further  reinstatement 
was  prohibited. 

"The  extravagant  cost  of  this  improvement,"  continued  the  reporter,  "is 
accounted  for  in  various  ways.  Besides  paying  excessive  sums  for  building 
the  gigantic  foundation  walls,  the  city  paid  twice  for  the  same  dirt  dumped  in 
between  the  walls  as  a  bottom  for  the  roadway.  There  were  several  hundred 
thousand  cubic  yards  of  dirt  required  and  the  same  contractor  was  paid 
about  40  cents  a  cubic  yard  for  removing  the  dirt  from  the  street  through 
which  the  underground  railroad  runs,  which  he  was  excavating  at  the  time. 
He  was  paid  another  generous  sum  for  dumping  the  dirt  into  the  Driveway. 
Besides  this  double  payment  he  received  fifty  cents  a  load  from  private  con- 
tractors for  the  privilege  of  dumping  their  dirt  in  the  unfinished  Driveway. 

"How    amazing!"    exclaimed   the   merchant.    "Such   profligracy   would 
bankrupt  any  city.     Did  the  public  know  of  this  double  payment?" 
'I  hardly  think  so,  else  there  might  have  been  some  protest." 
'Did  the  newspapers  or  the  city  officials  know?"  pursued  the  merchant. 
"Some  of  them  did"  responded  the  reporter. 

The  two  men  walked  on  until  they  reached  a  point  in  the  improvement 
where  the  Driveway  turns. 

"Here  the  city  paid  large  profits  to  private  landowners  for  the  v/idening 
of  the  roadway,"  resumed  the  reporter.  "It  acquired  a  strip  of  property  that 
belonged  to  a  charitable  institution  and  it  paid  the  institution  such  a  generous 
sum  that  the  lawyer  who  negotiated  the  sale  obained  a  fee  of  $25,000.  The 
total  award  was  less  than  ten  times  that  sum.  The  lawyer  has  made  millions 
out  of  the  city  through  similar  land  condemnations,  of  which  I  will  tell  you 
more  at  another  time.  The  city  also  paid  large  sums  to  real  estate  speculators 
and  politicians  for  property  a  little  further  up,  of  which  no  use  has  since  been 
made.  One  of  these  speculators  was  a  Unancial  hacker  of  the  successful  presi- 
dential candidate  in  the  recent  election.  His  associates  in  these  transactions 
stood  high  in  the  councils  of  the  dominant  political  party.  The  property  lies 
in  the  same  rough  and  undeveloped  condition  that  it  was  when  the  city  bought 
it  for  more  than  twice  what  it  was  worth. 

"Right  here  under  this  bluff,"  continued  the  reporter,  "the  city  enabled  a 
group  of  politicians  to  make  large  profits  by  the  filling  in  of  city  land.  It 
made  a  free  gift  of  the  dumping  privilege  to  dummies  for  the  politicians  and 
enabled  them  to  collect  from  35  to  50  cents  a  cubic  yard  for  all  the  dirt  and 
ashes  dumped  over  the  bluff.    It  was  the  only  place  available  for  miles 

33 


^i^ 


u^ 


I 


around  for  dumping  purposes,  and  contractors  paid  handsomely  for  the  priv- 
ilege of  using  the  dump.  There  was  a  building  boom  in  the  vicinity  and  con- 
tractors were  anxious  to  dispose  of  their  cellar  excavations  with  the  easiest 
facility.'* 

The  two  men  continued  their  stroll  northward  and  came  to  a  point  where 
the  formation  of  rock  strata  under  the  surface  was  being  tested  by  borings. 
The  purpose  of  the  tests  was  to  find  a  suitable  ledge  for  bridge  foundation. 
The  city  was  actually  planning  the  construction  of  a  bridge  across  the  river, 
at  a  point  where  the  river  is  two  miles  wide.  Such  a  structure  would  cost 
at  least  $30,000,000  and  would  prove  of  no  adequate  commercial  beneAt. 

"But  it  would  enable  the  railroads  that  now  have  their  termini  on  the 
other  side  of  the  river  to  bring  their  trains  into  the  city,**  suggested  the  mer- 
chant. "That  would  reduce  the  cost  of  food  and  other  products  and  result  in  a 
saving  by  the  people." 

"That  reminds  me,"  continued  the  reporter,  "that  some  twenty  years  ago 
a  bridge  was  projected  across  the  river  by  the  railroads  on  the  other  side. 
The  railroads  were  willing  to  build  the  structure  at  their  own  expense.  They 
petitioned  the  legislature  of  this  state  for  a  franchise  and  they  also  petitioned 
the  political  boss  of  this  city  for  his  influence.  The  petition  of  the  railroads 
on  the  other  side  was  met  by  the  opposition  of  the  railroads  in  this  state. 
The  'sise'  of  the  argument  against  the  project  was  insufficient  to  satisfy  the 
cupidity  of  the  political  'boss,*  and  the  project  was  successful.  A  franchise 
was  granted  by  the  legislature  and  only  recently  an  attempt  was  made  to  revive 
it,  the  local  city  government  and  the  national  authorities  being  importuned  to 
extend  the  life  of  the  franchise  ten  years.  The  city  has  actually  spent  half 
a  million  dollars  in  preliminary  plannings  for  a  bridge  to  be  erected  at  its 
own  cost.** 

The  two  men  now  reached  the  extreme  end  of  the  city  where,  in  order  to 
continue  their  journey,  they  crossed  a  new  steel  bridge  into  the  adjacent  ter- 
ritory. The  bridge  was  constructed  to  carry  the  underground  railroad  over 
the  channel.  Before  the  railroad  was  built,  the  channel  at  that  point  was 
spanned  by  a  wooden  structure  that  permitted  only  of  pedestrian  and  vehicular 
traffic.  The  old  bridge  was  shifted  a  mile  down  the  river  and  its  entrance 
on  one  side  is  in  the  centre  of  a  tract  of  land  owned  by  a  prominent  politician. 
The  value  of  his  property  has  been  greatly  enhanced  by  the  change  in  the 
location  of  the  bridge  and  by  the  construction  of  the  underground  railroad. 

"Before  we  leave  this  vicinity,**  continued  the  reporter,  "I  want  to  show 
you  a  'job*  that  cost  the  city  a  fortune.  That  beautiful  driveway  that  you 
see  stretching  along  the  river  is  maintained  for  the  exclusive  use  of  fast 
horses.  Its  construction  cost  the  city  several  million  dollars  and  it  has  been 
used  but  little  in  recent  years.  Yet  each  year  since  it  was  accepted  as  finished 
from  the  contractor,  the  city  has  spent  thousands  of  dollars  to  keep  it  from 
sliding  into  the  river.  Half  a  million  dollars  was  appropriated  recently  for 
this  purpose  and  as  fast  as  the  money  is  spent  more  is  needed. 

"The  construction  of  this  driveway  made  several  persons  rich,  for  the 
city  paid  several  million  dollars  for  land  surrounding  and  overlooking  the 
drive\yay.  The  land  was  purchased  mainly  from  politicians  and  their 
financial  friends,  who  themselves  acquired  the  property  only  a  short  while 
before.    The/  received  fabulous  sums  for  their  holdings.    The  coterie  also 

34 


made  large  profits  out  of  the  construction  of  the  driveway,  for  they  provided 
the  material  in  conjunction  with  the  contractor,  out  of  which  the  road  was 
built.  There  may  be  some  satisfaction  in  the  fact  that  one  of  the  men  who 
profited  so  largely  at  the  city*s  expense  in  this  transaction,  is  a  victim  of  self- 
destruction.  Another  served  a  term  in  a  federal  jail,  a  third  stands  before  the 
bar  convicted  of  professional  misconduct,  a  fourth  is  self-expatriated,  while  a 
fifth  is  also  a  stranger  to  his  own  country.'* 

The  two  men  crossed  the  river  where  the  chief  elective  officer  was  recently 
deposed  after  an  investigation  of  his  official  conduct.  He  had  been  the  reign- 
ing monarch  in  that  province  for  more  than  a  decade,  and  his  power  was 
well  nigh  insuperable.  Like  his  associate  in  corresponding  office  in  another 
part  of  the  city,  he  tried  to  retain  his  office  after  removal.  He  was  of  the 
same  political  caste  as  his  fellow  patriot,  and  succeeded  in  hanging  to  his 
position  until  near  the  close  of  his  elected  term. 

It  was  found  that  this  official  was  serving  his  own  ends  by  the  wanton 
expenditure  of  the  public  funds ;  that  he  wasted  $2,000,000  in  salaries  to  poHt- 
ical  followers;  and  that  he  spent  thousands  of  dollars  in  the  construction  of 
roads  and  highways  in  remote  regions  for  the  benefit  of  property  owned  by 
his  friends.  He  was  found  guilty  of  awarding  contracts  without  fair  competi- 
tive bidding,  and  in  one  case  it  was  found  that  he  remitted  the  fine  of  $70,000 
imposed  on  one  contractor,  who  had  contributed  $1,000  to  his  election  cam- 
paign fund. 

It  was  fourd  that  contracts  in  this  district  were  improperly  performed 
and  that  the  records  of  payments  were  consistently  falsified.  It  was  found 
that  streets  were  opened  at  the  expense  of  the  taxpayers,  where  they  would 
benefit  property  owned  by  personal  friends  without  regard  to  the  needs  of 
the  community,  and  it  was  also  learned  that  the  offending  official  had  knowl- 
edge of  the  fact  that  a  subordinate  in  his  service  was  compelled  to  pay  over 
part  of  his  salary  to  another  official  in  order  to  secure  merited  advancement. 

All  these  facts  were  revealed  under  oath  and  their  authenticity  therefore 
cannot  be  doubted. 

The  two  citizens  had  now  reached  a  point  at  the  extreme  east  of  the 
district,  where  the  reporter  pointed  out  a  site  that  was  acquired  by  the  city 
during  the  incumbency  of  the  deposed  official. 

"This  site,"  explained  the  reporter,  "is  at  the  mouth  of  a  g^eat  trunk 
sewer.  It  was  purchased  by  the  city  for  a  public  park  and  bathing  beach. 
It  is  needless  to  say  that  it  has  never  been  used  for  either  purpose,  first, 
because  it  is  unfit  for  bathing,  and,  second,  because  it  is  inaccessible  to  the 
public.  The  city  paid  a  quarter  of  a  million  dollars  for  the  site,  which  was 
fifty-three  times  its  assessed  value,  on  which  taxes  were  paid.  The  property 
was  transferred  a  few  weeks  before  the  city  acquired  it,  for  one-third  the 
price  the  city  paid,  the  purchaser  being  the  lawyer  who  represented  the 
owners.  He  acquired  the  property  through  dummies  after  negotiations  with 
the  city,  on  behalf  of  his  client,  were  begun.  He  is  the  same  lawyer  who 
received  a  fee  of  $25,000  for  disposing  of  property  along  the  Drive  to  the 
city  for  the  widening  of  that  roadway.  His  profits  on  this  transaction  were 
$170,000,  but  the  price  of  his  duplicity  has  been  disbarment  from  legal  prac- 
tice in  the  future.** 

35 


r 


li 


"What  an  amazing  affair  this  is  !**  gasped  the  merchant.  "How  could  the 
city  withstand  insolvency  when  its  funds  were  so  flagrantly  wasted." 

"There  has  been  a  great  deal  of  other  waste  in  this  section  of  the  city," 
resumed  the  reporter,  "but  it  is  hardly  necessary  to  go  into  further  detail  now. 
You  have  seen  and  learned  enough  of  what  has  been  going  on  in  this  com- 
munity for  many  years.  Hundreds  of  thousands  of  dollars  were  squandered 
for  wrong  map-making  (laying  out  of  new  streets),  for  the  purchase  of  sup- 
plies at  extravagant  figures,  and  for  a  thousand  and  one  details  that  the  city 
could  have  gotten  along  without.  But  there  is  one  monument  to  the  over- 
towering  greatness  of  this  borough's  former  chief  which  will  live  forever  in 
the  memory  of  its  citizens. 

"It  is  the  great  courthouse  that  has  been  built  at  a  cost  of  $2,000,000, 
and  the  end  is  not  in  sight.  The  corruption  of  the  city  seems  to  be  ironically 
expressed  in  the  cost  of  its  judicial  temples.  Here,  as  in  the  lower  part  of 
the  city,  is  a  court  house  that  is  an  eyesore  because  of  the  lavishness  of  its 
cost  and  the  uselessness  of  its  construction.  And  it  took  a  dozen  years  to  finish 
each  structure/* 

The  two  men  had  now  reached  the  spot  where  the  court  house  stands, 
and  faced  a  structure  which  was  in  its  tenth  year  of  building  and  resembled  a 
fortress  without  a  cannon. 

"The  architect  for  this  monumental  work  was  a  politician  of  local  re- 
nown," explained  the  reporter.  "His  sole  qualification  for  the  position  was 
that  he  was  a  member  of  the  executive's  political  cabinet  and  that  he  held 
political  mastery  over  a  small  section  of  the  community.  His  selection  as 
architect,  in  spite  of  his  conspicuous  unfitness  for  the  office,  was  one  of  the 
reasons  why  the  executive  was  subsequently  removed  from  office.  Needless 
to  say,  the  plans  for  this  building  originated  elsewhere  than  in  the  politician's 
head.  They  were  supplied  by  a  young  draughtsman  who  afterward  sued  for 
his  fees  and  obtained  a  verdict  for  a  large  amount.  Nevertheless,  the  politi- 
cian profitted  handsomely  from  his  appointment,  his  fees  alone  exceeding 
$60,000. 

"The  details  of  the  construction  of  the  building  furnish  a  scandalous 
chapter  in  the  history  of  this  community.  The  sight  of  the  building,  when 
the  truth  about  its  jobbery  became  known,  stirred  a  burning  indignation 
in  the  people,  who  saw  it  in  their  daily  travels  up  and  down  the  city. 
It  was  the  monument  that  caused  the  defeat  of  its  sponsor  when  he  ran  for 
reelection  to  office.  It  was  the  only  way  the  people  had  of  resenting  his 
political  impudence  and  of  rebuking  his  self-conceit. 

"I  might  add  that  the  preliminary  estimate  of  the  cost  of  the  structure 
finished  and  ready  for  use  was  $800,000,  which  in  itself  is  an  exorbitant  sum. 
When  the  $800,000  was  exhausted  a  request  was  made  for  $325,000  more,  and 
this  was  granted.  A  second  request  for  more  money  followed  the 
first.  The  furnishings  for  the  building  will  undoubtedly  exceed  a  quarter  of 
a  million  dollars,  and  there  will  probably  be  a  continuation  of  expense  running 
over  a  period  of  years  just  as  in  the  case  of  the  Record  building  in  the  lower 
part  of  the  city.  The  total  cost  of  the  building  furnished  and  ready  for 
use  will  exceed  $2,000,000,  and  its  uselessness  will  forever  be  a  public  aggrava- 
tion." 

36 


"I  WISH  THE  CITY  HAD  SOME  WAY  OF  ELECTING  HONEST 
MEN  TO  PUBLIC  OFFICE  WITHOUT  REGARD  TO  POLITICS," 
SIGHED  THE  MERCHANT,  AS  THEY  WALKED  AWAY  FROM  THE 
COURT  HOUSE.  "THERE  WOULD  THEN  BE  NO  SWAN  SONG  OF 
CORRUPTION  OR  CIVIC  MISRULE  AFTER  EACH  ADMINISTRA- 
TION, NOR  WOULD  THERE  BE  THE  STORY  OF  A  BANKRUPT 
CITY  TO  TELL.  CIVIC  RIGHTEOUSNESS  IS  WHOLLY  IMPOS- 
SIBLE UNDER  PRESENT  POLITICAL  CONDITIONS." 


M 


Hi! 


THE   CITY'S   MILLIONS   POURED   OUT  FOR   PROFITLESS 

BRIDGES 


11 


TWENTY-TWO  MILLION  DOLLARS  for  a  bridge,  the  cost  of  which  was  originally 
estimated  at  $14,000,000.  The  NET  income  fr'^m  ALL  the  bridges  was  less  than  their  laboring 
cost  of  maintenance,  not  counting  about  $3,000,000  a  year  intertst  on  bonds  issued  for  their 

construction. 

38 


CHAPTER  V 
WASTE  IN  BRIDGES  AND  STREET  CLEANING 

A  few  nights  later  a  group  of  citizens  gathered  at  the  home  of  the 
merchant  to  hear  the  reporter's  story  of  the  city's  wrongs.  One  of  them 
was  a  leader  in  the  dry  goods  trade  who  was  active  in  previous  movements 
for  civic  betterment;  another  was  a  well-known  lawyer,  prominent  in  public 
affairs.  A  third  was  an  energetic  business  man  who  had  had  instructive 
experience  in  one  branch  of  the  city  government.  Each  had  some  under- 
standing of  the  city's  mismanagement  and  was  waiting  only  for  amplification 
from  the  reporter. 

There  were  others  in  the  group  whose  knowledge  of  public  affairs  was 
even  more  extensive.  There  was  the  active  head  of  an  influential  civic 
organization  and  the  director  of  a  non-partisan  political  coterie.  There  was 
also  the  representative  of  a  powerful  real  estate  association,  whose  aim  was 
to  safeguard  the  interests  of  the  taxpayers.  These  men,  with  others,  were 
ready  to  lead  the  city  out  of  the  maze  of  its  financial  bewilderment. 

The  reporter  reviewed  the  situation  as  he  found  it  in  various  city  depart- 
ments. He  told  the  story  of  the  bridges  and  of  the  great  financial  wrong 
they  involved.  The  bridges  cost  $100,000,000  and  the  net  return  to  the  city 
was  not  one  cent.  On  the  other  hand,  they  involved  an  outlay  of  $3,000,000 
annually  for  interest  on  bonds.  The  bridges  were  designed  for  use  mainly 
by  the  railroads,  to  whom  they  were  leased  at  only  nominal  rental.  The 
income  from  the  four  structures  was  less  than  the  cost  of  maintenance;  and 
while  the  city  was  struggling  to  maintain  its  credit  by  the  payment  of  interest 
on  bridge  bonds  and  other  public  debt,  the  railroads  were  increasing  divi- 
dends on  inflated  capital  and  spending  millions  for  improvements  out  of  the 
profits  of  bridge  operation. 

The  city  had  offered  the  railroad  free  use  of  a  new  $14,000,000  under- 
ground roadway  connecting  three  of  the  bridges,  which  was  designed  to 
divert  traffic  from  one  of  the  structures  to  suit  the  public  convenience.  The 
offer  was  rejected  on  the  ground  that  the  use  of  the  subway  meant  no  addi- 
tional profit  to  the  railroad,  and  that,  therefore,  the  company  found  no  ad- 
vantage in  assuming  the  burden  of  interest  on  the  construction  cost.  The 
city  had  planned  for  the  convenience  of  the  traveling  public  as  well  as  for 
advantage  to  the  railroad.  The  subway  was  neglected  for  years,  and  the 
city's  credit  and  interest  for  the  $14,000,000  investment  was  wasted 

Three  of  the  bridges  were  constructed  in  a  period  of  ten  years,  at  a  cost 
of  $75,000,000.     The  cost  of  at  least  one  of  them  might  have  been  saved 
Traffic  on  two  of  the  new  bridges  was  so  meagre  that  the  income  tolls  were 
less  than  the  laboring  cost  of  maintenance,  not  even  counting  the  cost  of 
supervisory  engineering. 

d9 


* 


I 

4 


I 


The  reporter  analyzed  the  cost  of  construction  as  well  as  the  expendi- 
tures for  land  for  bridge  approaches.  These  lands  were  purchased  through 
commissioners  of  appraisal,  appointed  by  the  courts,  at  the  direction  of  the 
dominant  politicians.  The  reporter  took  as  illustration  of  the  prices  paid 
for  some  of  these  parcels,  the  report  of  one  set  of  commissioners  recently 
made  public.  Land  for  one  of  the  approaches  to  a  new  bridge  was  acquired 
in  an  outlying  borough  across  the  river.  The  commissioners  awarded 
$15,000  for  property  liberally  appraised  at  $5,000,  and  $22,000  for  a  parcel 
acquired  at  $2,000  a  short  time  before  the  city  took  title.  He  cited  other 
payments  that  were  plainly  in  excess  of  the  real  value  of  land  acquired  by 
the  city,  and  pointed  the  conclusion  that  of  $50,000,000  spent  in  ten  years  for 
land  for  a  bridge  approach  half  that  sum  was  misspent. 

An  interesting  side  light  was  thrown  on  the  true  inwardness  of  conditions 
surrounding  these  purchases  through  the  accidental  falling  out  of  a  well-known 
politician  and  his  son,  some  years  before.  The  father,  who  was  once  a 
prominent  public  official,  was  caught  in  a  raid  on  a  gambling  house  by  the 
police,  after  his  term  of  office  expired. 

"I  was  looking  for  a  wayward  son,"  offered  the  former  official  in  ex- 
planation of  his  presence  in  the  establishment. 

"He  wasn't  looking  for  me,"  retorted  the  son.  "He's  a  regular  patron 
of  the  place." 

The  clash  led  to  further  disclosures  and  the  young  man  let  it  become 
known  that  his  father  was  the  principal  factor  in  the  firm  in  which  he 
himself  was  a  member.  The  father  was  the  political  leader  in  the  district  in 
which  the  city  was  then  acquiring  land  for  bridge  approach. 

"We  represent  ninety  per  cent,  of  the  property  owners  in  this  proceed- 
ing," the  young  man  revealed,  "and  we're  making  large  fees.  But  my 
father  derives  the  bulk  of  the  profits  and  we're  only  his  agents." 

The  firm's  fees  aggregated  half  a  million  dollars.  The  city  paid  dearly 
for  the  land  it  bought,  and  among  those  who  profited  by  the  transactions  was 
a  horde  of  cunning  politicians  who  reaped  over  one  hundred  per  cent.  The 
appraisals  on  which  payments  were  based  were  made  by  men  selected  by  the 
politicians.  One  of  these  is  now  a  Supreme  Court  judge  at  a  salary  of 
$17,500  a  year. 

"The  story  of  this  proceeding  is  the  story  of  every  other  proceeding  for 
bridge  property,"  continued  the  reporter.  "In  this  case,  as  in  others,  some 
of  the  politicians  made  double  profits  by  collecting  rents  from  their  own  and 
other  buildings,  after  the  city  took  title.  These  buildings  were  left  standing 
by  the  city  authorities,  even  delaying  bridge  construction,  while  rents  were 
collected  by  other  than  city  agents.  The  story  of  one  of  these  incidents  is 
amusing. 

"The  city  awarded  a  contract  for  the  construction  of  foundation  piers 
for  this  bridge  to  a  group  of  political  contractors.  A  company  was  originated 
by  two  state  senators,  for  the  purpose  of  taking  over  the  contract  amounting 
to  $800,000.  The  capital  of  the  company  was  $7,500,  supplied  by  a  lawyer, 
now  a  Supreme  Court  judge,  acting  for  one  of  the  politicians  of  the  firm. 
The  company  was  on  the  point  of  dissolution  for  want  of  capital,  when  a 
happy  thought  struck  the  practical  member. 

40 


T^f 


m 


'Why  not  take  the  money  from  the  city?"  he  reflected.  "That's  the  way 
to  begin." 

No  sooner  suggested  than  done.  The  firm  claimed  ownership  of  the 
city's  condemned  houses,  scooped  in  $100,000  in  rents,  and  started  work  on 
the  contract  then  long  delayed.     The  company  made  a  handsome  profit." 

"The  contractors  must  be  well  satisfied  with  their  bargain,"  commented 
the  elderly  merchant.  "Our  profits  in  the  trade  are  not  quite  so  easy. 
In  this  case,  of  course,  it  paid  to  be  a  politician." 

"Yes,  they  are  so  thoroughly  satisfied,  that  they  are  suing  the  city  for 
$400,000  damages  under  the  contract  for  work  that  was  never  performed," 
explained  the  reporter.  "A  succeeding  commissioner  revoked  part  of  the 
contract  by  eliminating  the  construction  of  passenger  and  freight  elevators 
from  the  roadway  of  the  bridge  to  the  island  underneath  where  public  hospi- 
tals and  correctional  institutions  are  located.  These  elevators  would  have 
saved  the  city  a  great  deal  of  money.  They  would  have  done  away  with 
the  cumbersome  ferry  and  steamboat  service  between  the  island  and  the 
rest  of  the  city,  and  would  have  saved  the  exposure  of  sick  patients  trans- 
ferred to  the  island,  in  storm  and  inclement  weather.  They  would  also 
have  provided  easy  access  for  visitors  who  crowd  the  institution?-  monthly. 
I  might  add  that  the  contractor  was  paid  $55  a  cubic  yard  for  setting  masonry 
that  was  set  for  $13,  and  there  were  many  hundred  yards  paid  for  at  the 
higher  figure." 

The  reporter  took  up  the  waste  on  bridge  construction,  and  told  of  the 
excessive  cost  of  steel  for  the  bridge  spans.  In  one  instance,  the  estimated 
cost  was  four  and  a  half  million  dollars.  The  total  payments  exceeded  $6,000,- 
000.  The  steel  was  supplied  by  a  subsidiary  of  the  steel  trust,  which  also 
provided  the  material  for  one  of  the  other  bridges.  The  company  expected 
to  obtain  the  contract  for  the  newest  bridge,  but  was  disappointed  in  the 
result.  The  contract  was  awarded  to  two  well-known  contractors,  who  in- 
tended to  purchase  the  steel  from  the  disappointed  manufacturing  bidder. 
The  latter  refused  to  make  the  sale,  but,  no  sooner  was  this  difficulty  over- 
come by  the  indirect  purchase  of  the  steel  through  an  intermediary  company, 
than  another  and  more  vexatious  difficulty  arose. 

The  bonding  companies  with  whom  the  contractors  were  on  friendliest 
terms  up  to  this  time,  suddenly  agreed  that  they  were  unable  to  provide  the 
necessary  surety  of  $2,000,000.  It  was  at  this  stage  of  the  proceeding  that 
a  voice  whispered  temptingly  into  the  ear  of  one  of  the  contractors. 

"Let  me  place  your  bond  and  you'll  be  all  right,"  it  urged  confidingly. 

"How  much?"  rejoined  the  contractor. 

"Only  $200,000  and  half  the  profits,"  it  replied.  "It  ought  to  be  twice 
that  much.     (Pause.)     You  know  you'll  go  broke  if  you  don't  take  it." 

"And  I'll  go  broke  if  I  do,"  retorted  the  contractor.  "I'd  rather  go  broke 
my  way  than  yours." 

Behind  the  voice  loomed  the  figure  of  a  noted  politician.  A  few  days 
later  the  contractor  sought  the  city's  chief  financial  officer  and  laid  the  situa- 
tion before  him.     The  penalty  for  delay  under  the  contract  was  $1,000  a  day. 

"I  won't  give  up  a  cent  graft,  and  I'll  break  the  whole  gang  if  I  lose  this 
job,"  he  stormed. 

41 


■4 


A 


s 


The  bonding  monopoly  was  threatened.  The  contractor  was  aroused.  A 
few  days  later  the  situation  was  adjusted.  The  contractor  and  the  city's 
chief  finarKial  officer  locked  themselves  in  a  room  in  one  of  the  city's  offices, 
and  when  the  business  was  concluded,  the  bonds  were  executed  and  the  plot 
foiled.  The  contractor  pledged  real  estate  to  the  amount  of  $2,000,000,  located 
in  the  city  and  saved  the  cost  of  a  surety  bond.  Pending  the  proceedings, 
the  politician's  agents  stormed  the  door  demanding  admittance.  So  violent 
was  their  conduct  that  they  even  threatened  to  force  an  entrance  to  prevent 
the  acceptance  of  the  bond.  The  financial  officer  was  himself  denounced, 
such  was  the  audacity  of  the  political  group  which  claimed  exclusive  control 
of  the  bonding  privileges  on  large  city  contracts.  The  bonding  of  city  eiii- 
ployees  and  small  contractors  was  monopolized  by  other  and  smaller  poli- 
ticians. 

"This  is  a  practical  illustration  of  the  bonding  graft,"  explained  the 
lawyer  of  the  group.  "I  have  seen  its  operation  before.  The  situation  is 
even  worse  with  regard  to  contractors  in  the  new  watershed,  where  a  share  of 
the  contractors'  profits  as  well  as  bonding  commissions  are  also  exacted  by 
the  politicians.  Another  instance  of  an  attempted  bonding  hold-up  was  fur- 
nished recently  when  a  contractor  was  refused  a  bond  of  $400,000  on  a  large 
city  contract,  and  was  compelled  to  provide  real  estate  security." 

"This  partly  explains  why  reputable  business  men  refuse  to  do  business 
with  the  city,"  interrupted  the  energetic  merchant  who  had  not  yet  spoken. 
"I  had  an  experience  that  cured  me  of  all  ambition  in  this  direction.  I  was 
the  lowest  bidder  for  furnishing  material  for  street  cleaning  several  years 
ago,  and  to  my  surprise  my  bid  was  rejected.  My  nearest  competitor  was 
several  thousand  dollars  above  me.  The  contract  was  readvertised.  A  second 
time  I  was  lowest,  and  again  my  bid  was  thrown  out.  The  third  time,  one 
of  my  competitors  bid  under  me  and  was  awarded  the  contract.  I  afterward 
learned  that  the  successful  bidder  owned  the  patent  on  the  article  prescribed 
in  the  contract  and  that  nowhere  else  except  from  him  or  his  agents  could 
the  article  be  purchased.  His  profits  would  have  been  certain  even  had  I 
been  awarded  the  contract.  Under  his  first  and  second  bid,  his  profit  exceeded 
one  hundred  per  cent." 

The  reporter  completed  the  story  of  the  bridges  by  telling  of  the  lavish 
fees  paid  to  consulting  engineers  and  architects  on  bridge  work,  the  total  of 
which  exceeded  $2,000,000,  and  then  took  up  the  narrative  of  the  Street 
Cleaning  Department.  Most  of  the  two  million  dollars  was  wasted,  since 
the  actual  engineering  work  and  draughting  was  done  by  the  city's  own 
salaried  employees.  An  instance  of  how  the  city's  interest  is  served  by  its 
own  engineers  was  shown  recently  when  it  was  disclosed  that  an  engineer  in 
the  city's  employ  received  $40,000  from  a  bridge  contractor  whom  he  helped 
to  "win"  a  contract  and  whom  he  served  as  "expert"  while  city  engineer  at 
a  salary  of  $7,500  a  year.  It  might  also  be  mentioned  that  the  original  esti- 
mate of  the  city's  engineers  on  the  cost  of  one  of  the  city's  newest  bridges  was 
$14,000,000,  while  the  actual  cost  exceeded  $22,000,000. 

The  largest  item  of  waste  in  the  Street  Cleaning  Department  was  the 
removal  of  snow  in  winter,  the  cost  of  which  averaged  $1,000,000  a  year.  In 
one  season  the  city  paid  $2,000,000.    This  was  for  a  fall  of  fifty  inches,  or 

42 


at  the  rate  of  $40,000  an  inch.  A  few  winters  later,  under  a  hypocritical 
"Reform"  mayor,  the  city  paid  $1,250,000  for  the  removal  of  twenty-two 
inches  of  snow,  approximately  $60,000  an  inch, — proving  that  instead  of 
economy,  there  was  nothing  but  the  rankest  waste  if  not  the  grossest  fraud 
in  the  execution  of  the  task. 

Forty  thousand  dollars  an  inch  was  the  high-water  mark  for  snow 
removal  up  to  that  time.  Sixty  thousand  dollars  an  inch  is  the  new  record 
performed  in  the  face  of  the  most  insistent  demands  for  public  economy  and 
in  the  teeth  of  the  highest  tax  rate  known  to  the  city.  And  the  head  of  the 
department  responsible  for  this  astonishing  extravagance  was  hailtd  a  hero 
in  public  print  because  he  WITNESSED  the  shooting  of  the  city's  chief 
executive  a  few  years  previous. 

The  grossest  frauds  were  shown  when  the  city  paid  $40,000  aM  inch  for 
snow  removal  to  a  contractor  affiliated  with  the  local  political  boss.  It  was 
shown  that  he  was  paid  for  the  removal  of  four  times  more  snow  tkan  could 
physically  have  been  carted  away  by  the  men  and  carts  admitted  to  have 
been  employed.  It  was  also  shown,  from  official  reports,  that  toas  of  snow 
were  dumped  into  sewers,  for  which  the  full  price  of  removal  was  paid. 
This  practice  not  only  constituted  a  fraud  on  the  city,  but  it  r«sult€Ki  in 
costly  damage  suits  by  private  property  owners,  which  the  city  had  to  settle. 

The  city  paid  for  the  removal  of  snow  on  the  basis  of  all  that  fell,  less 
a  certain  percentage  deducted  for  shrinkage.  This  reduction  was  purely 
arbitrary,  and  it  left  the  way  open  for  the  payment  of  fabulous  sunw  to  favored 
political  contractors.  It  also  made  possible  the  ruin  of  a  snow  contractor 
who  happened  to  fall  into  political  disfavor.  More  than  $io,ooo,»oo  has  been 
spent  for  snow  removal  in  less  than  a  dozen  years,  half  of  which  was  either 
stolen  or  wasted,  and  practically  all  of  it  was  paid  to  favored  poHticians  and 
their  business  associates. 

"I  have  often  marvelled  at  the  city's  simplicity  in  continuing  the  primi- 
tive plan  of  snow  removal  and  in  renewing  the  services  of  the  snow  contractor 
each  year,"  commented  the  lawyer  sagely.  "But,  strange  as  it  may  saem,  not 
only  are  his  services  renewed,  but  so  friendly  are  his  relatiops  with  the 
city  authorities  that  he  and  his  relatives  now  hold  $40,000,000  of  city  con- 
tracts. The  margin  of  profits  on  these  contracts  is  at  least  ten  per  cent.,  or 
about  $4,000,000." 

The  reporter  reviewed  the  story  of  the  contract  for  the  removal  of  ashes 
and  rubbish  from  one  part  of  the  city  and  told  of  the  enormous  profits  made 
therefrom  by  a  group  of  influential  citizens  and  politicians.  The  asbes  were 
carted  away  by  railroad  to  another  part  of  the  city  and  dumped  into  marsh 
lands  owned  by  the  politicians.  These  lands  were  increased  many  times  in 
value  as  a  result  of  the  filling  in,  and  the  city  paid  $300,000  a  year  to  have 
the  ashes  removed.  The  politicians  made  twice  that  sum  out  of  the  increase 
in  land  values  each  year. 

Among  those  interested  in  this  contract  was  the  head  of  a  powerful 
political  organization;  another  was  a  former  public  official.  There  were 
others  identified  with  the  railroad  and  with  a  contracting  company  for  which 
the  former  city  official  was  counsel.  This  contract,  like  the  preceding  one, 
was  a  fraud  on  the  city  since  it  was  awarded  after  collusive  competition.    The 

43 


ill 


contract  was  lobbied  through  the  city's  financial  board  at  the  end  of  the 
preceding  administration,  by  the  business  partner  of  a  leading  politician  and 
the  former  himself  made  thousands  of  dollars  profit  through  the  sale  of  horses 
to  the  city. 

Another  contract  which  interested  the  conference  and  of  which  note  was 
made,  was  that  of  garbage  removal  from  the  city  streets.  The  city  paid 
half  a  million  dollars  a  year  for  this  service  and  the  company  that  holds 
the  privilege  makes  at  least  as  much  more  each  year  out  of  the  by-products  of 
the  garbage.  This  company  has  had  the  contract  for  more  than  a  dozen 
years,  and  the  only  time  when  the  price  was  reduced  to  anything  like  normal 
figure  was  one  year  when  genuine  competition  developed.  The  city  saved 
$100,000  that  year.     Since  that  time  the  city  has  paid  monopoly  prices. 

In  most  large  cities  where  the  quantity  of  garbage  is  less  than  here,  and 
where  its  value  for  commercial  purposes  is  not  so  great,  garbage  is  removed 
from  the  city  free  of  cost.  Contractors  are  anxious  to  obtain  the  refuse  for 
the  value  of  its  by-products,  and  in  some  cities  they  even  pay  for  the  privilege 
of  collecting  it.  Such  is  the  result  of  competition  in  a  city  where  politics  has 
no  sway.  More  than  half  a  dozen  useful  chemicals  are  made  out  of  the 
garbage,  the  most  useful  being  ammonia  and  fertilizing  material. 

Another  item  of  large  cost  and  great  expense  to  the  city  is  the  purchase 
of  horses  for  street  cleaning  purposes.  The  city  was  paying  the  highest 
price  for  horses  at  the  time  of  its  insolvency,  and  for  fifteen  years  it  placed 
itself  in  the  voluntary  grip  of  an  avaricious  horse  monopoly.  The  price 
per  horse  for  street  cleaning  use  was  $350,  an  increase  of  one  hundred  per 
cent,  in  ten  years.  The  department  spent  $100,000  a  year  for  horses,  and  the 
chief  of  the  firm  from  which  the  horses  were  purchased  testified  under  oath 
that  he  would  supply  the  same  horses  to  the  city  for  twenty-five  per  cent,  less 
if  the  horses  were  purchased  in  smaller  quantities. 

There  was  a  ring  within  a  ring  in  this  horse  combination,  and  a  double 
profit  was  made  out  of  the  city  on  these  horses,  which  were  sold  at  public 
auction  a  short  time  after  the  city  acquired  them.  In  some  instances  the  city 
used  the  animals  less  than  ninety  days  before  they  were  disposed  of  as 
"unfit"  to  those  in  the  lesser  horse  coterie,  and  sometimes  relet  to  the  city 
at  the  price  of  good,  healthy  animals.  In  fact  the  horses  sold  as  "unfit,"  for 
a  fraction  of  their  cost,  were  engaged  in  the  same  service  of  street  cleaning 
in  a  neighboring  city,  just  prior  to  the  city's  collapse! 

The  reporter  then  told  of  the  waste  in  the  purchase  of  forage  for  the 
horses  and  in  the  hire  of  scows  and  tugs  for  the  removal  of  rubbish  and  ashes 
to  sea.  He  also  told  of  the  loss  of  thousands  of  dollars  annually  through  the 
leasing  of  the  "picking  and  trimming"  privileges  to  favored  contractors.  This 
privilege  yielded  $2,000  a  week  to  the  city  under  competition  when  the  harvest 
of  profit  plucked  from  the  rubbish  was  less  than  in  recent  years.  The  city 
received  less  than  one-half  that  sum  for  the  privilege  when  it  became  twice  as 
profitable. 

The  waste  in  forage  and  other  supplies  was  shown  to  be  enormous  and 
it  was  also  officially  proven  that  the  quality  of  forage  provided  for  the  horses 
was  far  under  the  grade  for  which  the  city  paid.    There  were  other  large 

44 


items  of  waste  in  this  department,  such  as  the  payment  of  extravagant  rentals 
for  stores  and  stables  in  various  parts  of  the  city  for  departmental  use, 
and  in  the  purchase  of  quantities  of  lumber  and  other  material.  These 
"wastes"  were  a  source  of  profit  to  favored  politicians;  one  of  them  derived 
more  than  half  a  million  dollars  for  the  rental  of  one  stable  in  less  than  a 
dozen  years. 

There  were  wastes  in  other  items  that  cost  the  taxpayers  of  the  city 
dearly  for  the  gratification  of  individuals  with  political  influence  and  pre- 
hensile commercial  instinct.  The  city  paid  fancy  prices  for  "water  sweepers" 
accepted  by  the  commissioner,  who  demanded  $100,000  for  their  purchase. 
The  "sweepers"  were  condemned  as  impracticable  after  they  were  in  use  a 
short  time,  and  the  new-fangled  contrivance  that  discharged  tons  of  water 
against  the  city  pavement  under  compressed  air  compulsion,  was  relegated  to 
the  junk  heap.  It  took  five  minutes  to  fill  these  compressed  air  water  tanks, 
and  but  three  minutes  to  discharge  the  water  against  the  city's  pavement! 
In  spite  of  this  fact,  however,  $50,000  more  was  requested  for  "water  sweepers" 
before  the  city's  failure. 

SUCH  WAS  THE  STORY  OF  THE  MISMANAGEMENT  OF 
THESE  DEPARTMENTS,  THE  INEFFICIENCY  OF  WHICH  WAS 
TYPICAL  OF  OTHER  BRANCHES  OF  THE  CITY  GOVERNMENT. 
THE  LOSS  TO  THE  TAXPAYERS,  CONSERVATIVELY  ESTIMATED, 
WAS  AT  LEAST  $2,000,000  A  YEAR,  DIVERTED  FROM  THE  CITY 
TREASURY  TO  THE  POCKETS  OF  THOSE  IN  POLITICAL  AND 
PUBLIC  CONTROL.  THE  SAVINGS  THAT  MIGHT  HAVE  BEEN 
EFFECTED  WERE  NOT  THOUGHT  OF  OR  ATTEMPTED  BY  THOSE 
IN  AUTHORITY,  AND  THE  PUBLIC  HASN'T  YET  AWAKENED  TO 
THE  MEANS  BY  WHICH  THEIR  MONEY  WAS  "SQUANDERED." 
THE  PURPOSE  OF  THE  WASTE  IS  APPARENT;  ONLY  THOSE 
WHO  WERE  IN  POWER  PROFITED. 


45 


I 


CHAPTER  VI 
WATER  WASTE  AND  EXTRAVAGANCE 

Mismanagement  and  waste  of  public  funds  were  by  no  means  confined  to 
the  Bridge  and  Street  Cleaning  Departments  reviewed  in  the  previous  chapter. 
While  it  may  be  reasonably  asserted  that  of  the  $100,000,000  spent  m  these 
departments  during  ten  years  prior  to  the  city's  collapse  one  quarter  was 
stolen  and  wasted,  the  records  of  other  departments  show  a  percentage  of 

loss  equally  as  large.  j  •   j-  •  j     i„ 

The  Water  Department  yielded  princely  revenues  to  favored  mdividuals 
and  private  corporations.  Contracts  and  jobs  were  always  at  their  disposal 
and  the  department  was  always  the  haven  of  the  politician  and  his  hench- 
men. The  management  of  the  department,  which  was  a  grave  responsibility 
was  usually  accepted  as  a  political  cinch.  It  was  because  of  this  superficial 
aspect  of  the  importance  of  the  position  that  the  city's  funds  were  flagrantly 
wasted  and  the  lives  of  the  people  endangered.  The  gravity  of  the  situation 
became  alarmingly  apparent  when  one  of  the  city's  reservoirs  was  emptied  of 
its  contents  and  a  water  famine  threatened. 

"The  water  was  scientifically  discharged,"  was  the  gratifying  exp  anation 
of  the  head  of  the  department  when  asked  why  the  millions  of  gallons  of 
water  were  deliberately  released.    "The  water  was  let  out  to  clear  the  reser- 

''''''^  At  the  same  time,  under  the  threat  of  "famine,"  contracts  were  hastened 
for  the  excavation  of  a  water  tunnel  throughout  the  length  of  the  city  at  a 
cost  of  $25,000,000  and  the  proposition  was  advanced  by  the  head  of  the  de- 
partment himself  that  the  city  purchase  all  private  water  plants  in  outlying 
districts.  The  plants  were  offered  to  the  city  at  several  times  their  real 
value  The  offers  aggregated  $20,000,000.  The  profits  of  the  plants  zvere 
threatened  by  the  extension  of  the  city's  own  water  mams  from  tts  new 
system  constructed  at  a  cost  of  $200,000,000. 

The  head  of  the  water  department  also  urged  that  the  city  enter  into  a 
contract  for  a  new  "temporary"  water  supply  to  forestall  the  threatened 
"famine"  before  the  $200,000,000  system  was  completed.  His  plan  was  to  tap 
the  watershed  of  an  adjoining  state  at  a  contract  cost  of  over  $1,000,000  for 
pipe  line  and  at  an  expense  of  from  five  to  ten  million  dollars  for  consequen- 
tial damages  to  business  and  private  property.  The  plan  had  been  rejected 
by  a  previous  administration  because  of  its  apparent  wastefulness.  The  com- 
missioner later  "discovered,"  after  his  plan  was  generally  disapproved,  that  the 
need  for  "temporary"  water  no  longer  existed.  ' 

The  plan  for  the  sale  of  the  private  water  plants  was  long  nurtured  and 
was  ready  for  execution  when  the  cry  of  "famine"  arose.  Eut  the  city 
was  shy  of  funds  and  the  owners  of  the  plants  and  the  head  of  the  department 
himself  were  compelled  to  wait  for  a  more  favorable  opportunity.  The 
owners  were  encouraged  by  the  previous  sale  of  two   private  water  com- 

46 


nanies  to  the  city.  The  price  paid  for  them  was  $2,000,000,  and  their  pur- 
chase rested  entirely  with  the  head  of  the  water  department,  who  was  the 
mayor's  political  crony;  with  the  chairman  of  the  finance  committee  of  the 
municipal  assembly,  who  was  a  notorious  politician;  and  with  the  city's  chief 
financial  officer. 

The  two  political  office  holders  were  more  prosperous  after  the  sale. 
The  head  of  the  water  department  himself  became  the  owner  of  a  one-third 
interest  in  another  water  plant  drawing  $25,000  a  year  from  the  city  on  a 
contract  which  he  himself  executed  for  the  city  when  in  office.  The  contract 
stipulated  the  payment  for  five  years  of  eighteen  dollars  a  year  for  each  fire 
hydrant  erected  by  the  city  in  the  territory  supplied  from  this  company's 
mains,  and  no  account  is  taken  of  the  volume  of  water  used  by  the  city.  The 
water  for  which  the  city  pays  is  available  only  for  fire  purposes,  and  its  use 
is  slight. 

Since  the  purchase  of  the  two  water  plants  mentioned,  their  cost  of 
operation  has  doubled.  The  price  of  fuel  and  labor  has  gone  up  and  easy 
berths  were  provided  at  the  expense  of  the  taxpayers,  for  political  dependents 
who  had  no  other  jobs. 

At  the  time  of  the  city's  collapse,  it  was  paying  a  quarter  of  a  million 
dollars  a  year  to  private  water  companies  that  were  supplying  water  to  the  city 
in  suburban  areas.  These  companies  enjoyed  intimate  relations  with  the  water 
department.  They  were  on  such  friendly  terms  that  for  many  years  one  of 
them  filched  the  city's  water  and  sold  it  through  its  own  mains.  No  attempt 
was  made  by  the  city  to  recover  the  value  of  the  stolen  water  after  discovery, 
and  the  head  of  the  department  who  made  the  discovery  was  afterward  shifted 
to  another  office.  In  another  district,  the  city  restricted  the  extension  of  its 
own  system  of  wells  in  order  that  a  private  plant  might  sell  more  water; 
and  in  another  area  where  the  city  made  a  contract  for  five  million  gallons  of 
pure  water  a  day,  the  private  plant  was  unable  to  supply  the  contract  require- 
ment. Its  water  was  reported  as  chemically  impure  by  the  city  authorities, 
but,  in  spite  of  this  fact,  its  claims  were  generously  compromised  and  paid 
by  the  city. 

Private  water  plants  doing  business  with  the  city  made  many  politicians 
rich.  One  attempt  to  sell  one  of  these  plants  discloses  the  general  scheme  of 
such  money-making.  The  charter  for  this  company,  which  supplied  water  to 
an  outlying  part  of  one  of  the  city's  boroughs,  was  obtained  from  the  state 
legislature  through  the  instrumentality  of  local  politicians.  One  of  them 
was  a  state  senator.  This  was  many  years  before  the  city'^,  collapse.  The 
cTiarter  and  the  legislative  act  creating  it  were  drawn  wi  h  the  aid  of  a 
cunning  young  lawyer  who  counselled  the  politicians. 

Before  the  deal  to  sell  the  plant  to  the  city  could  be  consummated  at  an 
exorbitant  figure,  a  rival  ?nd  more  masterful  politician  appeared  on  the 
scene.  He  obtained  control  of  the  water  company,  and  offered  it  to  the  city 
at  $2,000,000.  The  dethroned  politicians  and  their  cunning  legal  adviser  set 
about  to  hinder  t'.ie  sale.  The  obstructing  lawyer  assumed  the  role  of  a 
public  benefactor  and  invoked  the  aid  of  the  courts. 

"The  deal  is  infamous,"  he  shouted,  with  virtuous  indignation.  "The  plant 
is  worthless  and  the  city  must  not  be  robbed." 

47 


1 


'i 


n 


1^ 


The  public  temper  was  aroused.  The  courage  of  the  lawyer  was  ap- 
plauded and  the  citizen  he  used  as  a  basis  for  his  legal  action,  to  prevent  the 
sale  of  the  company  to  the  city,  was  raised  in  public  esteem.  He  was  even 
offered  the  mayoralty  of  the  city.  The  city  afterward  purchased  the  plant 
at  large  profit  to  the  politicians,  and  the  lawyer  who  originally  prevented  the 
sale  urged  prompt  payment  of  the  purchase  price.  He  was  then  a  judge  of 
the  Supreme  Court 

At  the  time  of  the  city's  financial  disaster  it  was  paying  $5,000,000  a  year 
to  private  corporations  for  light,  heat  and  power.  These  corporations  were 
all  owned  by  one  group  of  financial  interests.  The  payments  had  increased 
steadily  and  were  made  on  the  endorsement  of  an  official  in  the  Water  De- 
partment who  was  retained  in  office  in  spite  of  frequent  protest  and  accusa- 
tions of  public  betrayal.  These  private  corporations  wielded  a  tremendous 
influence  in  city  affairs.  They  contributed  largely  to  campaign  funds  and 
awarded  patronage  to  politicians  by  providing  them  with  private  contracts  and 
jobs  for  their  followers. 

At  the  very  time  of  the  city's  ruin  the  city  was  attempting,  through  the 
courts,  to  recover  millions  of  dollars  out  of  which  it  was  charged  the  city  had 
been  defrauded  by  one  of  the  subsidiaries  of  the  lighting  trust.  It  was 
charged,  under  oath,  that  for  years  the  company  had  falsiHed  its  books  to 
withhold  payment  of  profits  from  the  city  as  provided  under  its  franchise. 
This  franchise  was  the  basis  of  the  trust's  monopoly,  for  it  provided  exclusive 
control  of  the  city's  conduits  through  which  electric  current  was  carried. 

The  city  purchased  electric  light  and  gas  from  these  companies  for  many 
years,  but  received  no  return  from  the  franchises,  which  were  earning  millions 
of  dollars  annually.  It  was  not  until  a  law  was  passed,  taxing  these  franchises, 
that  the  city  was  partly  compensated  for  its  privileges,  and  then  the  companies 
withheld  payments  for  many  years.  As  an  offset  to  the  millions  owed  the 
city  under  the  franchise  law,  the  lighting  companies  presented  bills  as  large 
as  the  franchise  debts  themselves.  During  all  the  years  of  the  life  of  the 
franchises,  dating  back  almost  a  century,  the  city  and  the  people  were  assessed 
at  from  three  to  ten  times  the  actual  cost  of  the  company's  service  for  heat 
and  illuminating  current.  The  history  of  these  franchises  is  steeped  in  the 
blackest  crimes  and  will  be  told  of  more  completely  at  another  time.  Suffice 
it  to  say  that  the  inferior  quality  of  gas  furnished  at  different  periods  resulted 
in  the  death  of  a  great  many  persons  from  "accidental"  asphyxiation,  in  the 
winter  time. 

.  Under  the  supervision  of  the  Water  Department,  the  city  spent  $10,000,- 
000  for  the  installation  of  water  mains  for  high  pressure  fire  service.  It 
purchased  pipes  for  more  than  they  were  worth  and,  when  the  system  in  a 
small  area  was  completed,  the  public  was  invited  to  witness  the  test  from  the 
new  mains.  The  newspapers  brought  their  cameras.  The  people  were  shown 
the  power  of  streams  discharged  from  these  pipes,  and  while  it  was  claimed 
that  a  pressure  of  nine  hundred  pounds  to  the  square  inch  could  be  sustained 
by  the  mains,  not  more  than  half  that  pressure  could  be  sustained  by  the 
rubber  hose  through  which  the  water  must  necessarily  be  discharged!  The 
excess  pressure  from  the  pipes  was  therefore  useless. 

It  was  also  claimed  that  the  installation  of  the  high  pressure  service 
reduced  the  premium  on  fire  insurance,  but  no  figures  were  presented  to  show 

48 


how  the  cost  of  high  pressure  maintenance  had  increased  the  burden  of  the 
taxpayers.  The  insurance  reduction  was  only  nominal.  The  budget  for  the 
year  preceding  the  city's  collapse  showed  that  $150,000  was  spent  for  the 
maintenance  of  the  new  system.  This  sum  is  interest  on  $3,000,000  at  five 
per  cent.  The  newspapers  were  shown  only  the  picturesque  side  of  the  new 
system,  and  in  turn  apprised  their  readers.  They  were  also  informed  that  the 
new  system  would  be  supplied  with  water  from  the  river,  and  that  billions  of 
gallons  of  fresh  water,  for  which  the  city  paid  at  the  rate  of  $50  a  million, 
would  be  SAVED.  Not  a  gallon  of  river  water  has  been  turned  into  the  high- 
pressure  pipes  since  their  installation,  though  millions  of  gallons  of  fresh 
water  have  been  discharged  through  them  daily.  It  is  now  claimed  that  the 
salt  water  would  damage  the  high-pressure  machinery. 

The  city  paid  exorbitantly  for  the  erection  of  pumping  plants  for  the  new 
system,  and  it  paid  exorbitantly  for  power  supplied  by  private  companies  to 
operate  the  pumping  stations.  It  paid  exorbitantly  to  equip  them  with  tele- 
phones and  other  needed  paraphernalia  for  emergency  use,  and  it  paid  exor- 
bitantly to  man  them  with  picked  political  crews.  In  that  way,  all  the  savings 
to  the  taxpayers  by  reduced  insurance  premiums,  if  any  there  were,  were  more 
than  wiped  out  by  the  wasted  city  funds  which  the  taxpayers  were  called  upon 
to  provide. 

This  department  spent  millions  for  water  pipes  from  favored  political 
contractors.  One  set  of  large  mains  purchased  for  use  under  one  of  the  city's 
main  thoroughfares,  lay  for  three  years  on  the  surface  of  the  street  before  it 
was  used.  An  illustration  of  the  manner  in  which  these  purchases  were  made 
was  furnished  when  a  contract  was  let  for  twenty  miles  of  72-inch  main  to 
extend  the  water  system  of  one  of  the  city's  boroughs.  A  specific  style  of  pipe 
was  provided  in  the  contract,  which  was  awarded  to  a  company  that  owned  the 
patent  on  the  pipe  through  a  subsidiary.  The  city  paid  monopoly  prices  under 
the  contract,  in  spite  of  the  charge  made  in  court  that  the  contract  was  a  fraud. 
No  other  contractor  could  supply  the  pipe  unless  he  purchased  it  from  this 
company,  its  subsidiary  or  from  an  agent  of  either. 

Another  illustration  of  the  reckless  waste  of  city  funds  in  this  depart- 
ment was  the  installation  of  water  mains  on  the  north  shore  of  the  city's 
island  borough.  The  plan  was  to  supply  the  community  with  water  from 
another  state  through  these  pipes.  A  contract  was  made  with  a  private  water 
company  in  the  adjoining  state,  but  the  sale  of  water  from  that  state  was 
prohibited  by  subsequent  legislative  act.  In  spite  of  this  fact,  the  federal 
authorities  were  induced  to  grant  consent  for  the  laying  of  water  mains  in 
the  bed  of  the  channel  between  the  island  and  the  adjoining  state.  The  life 
of  the  contract  was  repeatedly  extended  by  the  city  authorities  pending  the 
delay  in  its  fulfillment,  and  since  the  contract  has  been  cancelled  the  pipes  have 
been  rusting  out  their  million  dollars'  worth  in  the  ground.  These  pipes  are 
in  the  same  borough  in  which  the  two  private  water  plants  are  located,  which 
the  city  purchased  for  $2,000,000,  and  as  a  result  of  which  transaction  two 
politicians  were  generously  rewarded  for  their  "good  will."  While  the  city 
lost  millions  through  contracts  for  the  purchase  of  pipes  and  other  material 
for  water  purposes,  it  lost  a  great  many  millions  more  through  the  theft  of 
city  water  and  through  the  failure  of  the  department  to  collect  water  revenues. 

The  city  spent  $75,000,000  for  water  supply  and  it  was  spending  $200,000,- 

49 


k 


tl 


I 

■i 


1!^ 


000  for  more  water.  Its  revenues  were  far  below  the  cost  of  collection  and  the 
interest  on  the  water  bonds,  until  the  discovery  was  made  of  the  wholesale 
theft  of  water  and  of  the  inefficiency  in  collection.  It  was  found  that  one 
sugar  refinery  stole  millions  of  gallons  daily  through  a  surreptitious  pipe  that 
was  unmetered  and  that  breweries,  hotels  and  manufacturing  plants  were 
common  offenders.  An  unmetered  pipe  through  which  millions  of  gallons 
flowed  daily  was  also  found  leading  into  the  building  of  one  of  the  city's  most 
influential  newspapers!  The  city  sued  for  the  recovery  of  half  a  million 
dollars,  with  interest,  from  the  refinery,  and  recovered  a  verdict  from  the 
referee.  No  action,  however,  was  taken  by  the  city  to  collect  the  money,  until 
months  after  the  decision  was  pronounced.  Newspaper  publicity  prodded  the 
officials  into  action,  and  then  an  easy  compromise  was  effected.  The  refinery 
repaid  only  a  small  part  of  its  total  stealings. 

Water  revenues  were  increased  through  closer  inspection  and  through  an 
exposure  of  conditions  in  the  revenue  collecting  bureau.  Since  that  time 
the  income  from  water  rates  has  exceeded  the  cost  of  collection  and  interest 
payment.  An  attempt  was  made  to  check  all  water  waste  by  systematic  and 
scientific  means,  and  an  expert  was  engaged  for  this  purpose,  but  the  expert's 
services  were  discontinued  after  a  few  months,  in  spite  of  the  fact  that  large 
wastes  were  discovered.  It  was  charged  that  his  work  was  too  expensive. 
In  connection  with  the  thefts  of  water  by  business  establishments  in  the  city,  it 
was  recalled  that  several  years  before  the  city's  failure,  one  responsible  official 
in  the  Water  Department  had  been  presented  with  a  check  of  large  size  by 
a  group  of  the  largest  water  consumers  The  presentation,  of  course,  was 
without  public  ceremony. 

Of  the  total  supply  of  500,000,000  gallons  of  water  daily,  the  official 
estimate  was  that  at  least  thirty  per  cent,  was  wasted.  The  waste  was  ac- 
counted for  by  accidental  leakage,  public  neglect  and  theft.  The  unofficial 
estimate  of  experts  was  that  fully  half  the  supply  was  wasted  and  they  pointed 
for  corroboration  to  the  per  capita  use  of  water  in  this  city  and  in  other  large 
municipalities.    The  ratio  was  as  three  to  one  against  this  city. 

The  loss  of  water  revenues,  amounting  to  thousands  of  dollars  daily,  was 
only  part  of  the  wrong  inflicted  on  the  people  of  the  city  through  the  sale  of 
its  water.  When  the  department  started  to  increase  its  revenue,  it  ordered 
meters  installed  in  all  houses  that  were  not  pa3ring  for  water  on  a  frontage 
basis.  Only  such  meters  as  were  endorsed  by  the  municipal  assembly  could 
be  used,  and  only  such  plumbers  as  were  recommended  by  the  politicians  were 
permitted  to  be  engaged!  In  fact,  where  a  property  owner  was  ordered  to 
instal  a  meter  and  he  failed  to  do  so  within  a  prescribed  period  of  time,  the 
"public"  plumber  was  ordered  to  do  the  work.  This  involved  an  expense  of 
from  two  to  five  times  the  actual  cost  of  installing  the  meter,  but  the  land- 
lord had  no  course  but  to  pay  the  bill,  which  became  a  lien  against  his  prop- 
erty. This  practice  involved  a  loss  of  several  hundred  thousand  dollars  to 
property  owners  before  it  was  minimized  as  a  result  of  vehement  public 
protest. 

There  were  other  abuses  in  this  department  that  seriously  affected  the 
public  welfare.  One  of  these  was  the  levying  of  blackmail  on  small  mer- 
chants who  required  licenses  to  operate  electrical  machinery  in  moving-picture 
theatres.     This  practice  was  coupled  with  a  similar  practice  in  the  license 

50 


bureau  attached  to  the  mayor's  office,  in  which  the  secretary  of  a  former 
mayor  was  involved. 

A  recent  attempt  at  economy  in  public  lighting  and  heating  showed  how 
unpopular  such  a  plan  was  with  the  officials  of  the  water  department.  An 
official  engaged  in  another  office  attempted  to  reduce  the  payments  to  the 
lighting  companies  by  the  extension  of  the  city's  own  electric  lighting  and 
heating  service.  The  city  had  an  expensive  plant  in  the  ten-million-dollar 
Record  Building,  from  which  the  city  official  intended  to  supply  adjacent  public 
buildings.  The  city  had  other  buildings  where  expensive  plants  were  installed, 
but  their  use  was  prohibited  by  the  water  department. 

"We  can  get  our  light  cheaper  from  the  lighting  companies,"  was  the 
advice  of  the  water  department  "We  can  get  electricity  for  three  cents  a 
killowat  hour." 

The  opposing  city  official,  expert  on  the  subject,  showed  that  the  current 
could  be  manufactured  and  supplied  by  the  city  itself  for  one  half  that  price, 
but  in  spite  of  his  claim,  the  services  of  the  lighting  trust  were  continued. 
The  city  also  declmed  to  erect  a  lighting  plant  in  its  new  $14,000,000  muni- 
cipal structure  in  spite  of  the  fact  that  buildings  one-quarter  the  size  and  one- 
tenth  the  cost,  are  equipped  with  their  own  plants.  A  protest  by  organized 
•lectrical  engineers  against  the  further  disuse  of  the  city  electric  plant  in  its 
new  police  headquarters  was  also  disregarded.  The  plant  had  been  erected 
at  a  cost  of  many  thousands  of  dollars,  but  the  electric  service  in  the  building 
was  provided  by  the  lighting  monopoly,  at  exorbitant  price. 

The  city  also  erected  an  electric  plant  at  a  cost  of  $20,000  for  one  of  its 
charitable  institutions,  but  no  sooner  was  the  plant  finished  than  it  was  turned 
over  to  the  lighting  trust  for  exclusive  use.  The  city  paid  the  trust  the  same 
rate  for  current  here  that  it  paid  in  other  institutions  where  there  was  no 
city-built  plant. 

The  city's  money  was  wasted  in  other  ways  through  this  department. 
Automobiles  were  purchased  at  prices  far  in  exceess  of  what  they  were  worth, 
and  they  were  manned  by  chauffeurs  who  received  liberal  pay  for  little  or  no 
work.  The  automobiles  were  used  for  personal  pleasure  by  officials  to  whom 
they  were  provided.  One  automobile  in  this  department  was  smashed 
while  its  occupant  was  on  a  pleasure  jaunt  outside  the  city,  and  repairs  were 
made  at  the  city's  expense.  This  was  only  one  of  the  many  expensive  pleasure 
trips  in  city  automobiles  which  the  taxpayers  were  compelled  to  provide.  The 
astonishing  cost  of  these  pleasure  cars  and  their  uses  will  be  told  of  at  an- 
other time. 

The  city  also  paid  $15,000  for  a  boat  to  be  used  ostensibly  in  the  de- 
tection of  water  thefts  along  the  river  front.  No  detections  through  its  use 
are  recorded,  and  the  craft  itself  was  sold  for  scrap  iron  a  few  years  after 
its  purchase.    Its  mechanism  was  faulty  when  purchased. 

SUCH  WAS  THE  RECORD  OF  THE  WASTE  OF  PUBLIC  FUNDS 
IN  THE  WATER  DEPARTMENT,  TO  WHICH  THERE  WAS  LITTLE 
ABATEMENT  UP  TO  THE  TIME  OF  THE  CITY'S  COLLAPSE. 
SIMILAR  WASTE  WILL  BE  TOLD  OF  IN  OTHER  BRANCHES  OF 
THE  CITY  GOVERNMENT. 


51 


% 


ill 

-  i 


<.' 


»li 


^fJ 


^1 


C3 

I 

C 
CO 

e 

CO 


CO 
M 

H 


S-5 

§^ 
u  *i 
OS  CJ 

•C  O 

CO 
o 

o 

a 

a 
O 


62 


CHAPTER  VII 
DOCK  MISMANAGEMENT  AND  GRAFT 

In  spite  of  the  fact  that  the  city  at  one  time  owned  every  inch  of  its 
waterfront,  it  had  outstanding,  at  the  time  of  the  failure,  $125,000,000  of 
dock  bonds.  This  sum  of  money  had  been  spent  in  the  forty  years  of  the 
Dock  Department,  for  the  purchase  of  land  and  for  dock  construction,  and 
it  was  by  no  means  all  that  the  department  had  spent  during  that  period 
The  annual  running  expenses,  paid  out  of  taxation  and  provided  for  in  the 
yearly  budget,  was  $3,000,000.  Bonds  were  issued  only  for  "permanent"  pub- 
lic improvements. 

At  the  time  of  the  city's  failure,  the  plan  was  under  way  and  at  the  point 
of  execution,  for  the  expenditure  of  $70,000,000  more  for  dock  purposes. 
Part  of  this  money  was  to  have  been  paid  for  half  a  dozen  piers  owned  by  a 
private  corporation  anxious  to  dispose  of  them.  The  piers  jutted  into  the 
bay  from  the  lower  end  of  the  city,  and  were  backed  by  a  series  of  ware- 
houses of  large  capacity.  The  plan  was  to  sell  the  piers  to  the  city  for  a 
lavish  sum — about  $10,000,000 — so  that  the  wharfs  could  be  leased  for  less 
than  what  private  capital  might  charge.  In  that  way  the  business  of  the 
warehouses  would  be  stimulated  through  cheap  wharfage,  at  the  city's  expense. 
The  securities  of  the  warehouse  were  inflated  in  anticipation  of  such  a  trans- 
action and  the  proposition  was  even  presented  that  the  proprietor  of  the 
warehouses  should  manage  the  docks  after  they  were  sold  to  the  city. 

"Stimulate  the  commerce  of  the  port  by  increased  dock  facilities,"  urged 
the  prompters  of  the  scheme  on  the  city  authorities.  "Buy  all  the  waterfront 
and  build  more  docks." 

Many  prominent  and  worthy  citizens  repeated  the  advice.  The  people 
favored  municipal  ownership  and  this  public  inclination  was  used  as  a  lever 
for  popular  support  of  the  dock  project.  The  shipping  interests,  backed  by 
influential  bankers,  also  urged  the  purchase  of  the  piers,  as  did  divers  civic 
bodies.  The  public  had  no  understanding  of  the  real  facts.  It  was  willing 
that  the  city  should  spend  money  for  useful  public  purposes  and  it  had  been 
told  that  docks  were  a  paying  investment. 

It  was  through  the  Dock  Board  that  the  city  suffered  its  largest  financial 
losses.  The  affairs  of  the  department,  involving  the  expenditure  of  $15,000,- 
000  a  year,  were  administered  mainly  for  the  benefit  of  large  shipping  interests. 
Public  scrutiny  of  its  affairs  was  never  invited ;  in  fact  its  obtrusiveness  was  at 
times  resented. 

"We  can  manage  our  own  affairs,"  was  the  curt  reply  of  a  former  Dock 
Board  President  when  pressed  for  an  explanation  why  dock  leases  were  made 
at  less  than  their  real  value.    "We  don't  need  any  outside  interference." 

53 


The  Board  was  appointed  by  the  mayor  and  its  meetings  were  usually 
secret.  It  was  at  these  "executive"  sessions  that  the  pubHc  interest  was 
persistently  harmed.  Knowledge  of  the  Board's  doings  was  withheld  for 
months.  In  executing  dock  leases,  no  account  was  taken  on  the  city's  behalf 
of  the  expense  involved  in  maintaining  and  repairing  leased  docks.  Illumina- 
tion was  another  item  of  cost  charged  against  the  city.  The  year  previous 
to  the  city's  collapse,  it  paid  over  $5,000,000  for  dock  repairs  and  construction, 
which  amount  exceeded  the  total  dock  revenues  by  more  than  a  million  dollars. 
The  balance  of  the  $15,000,000  spent  that  year  went  for  other  docks  and  ferry 
purposes  and  for  salaries.  ^ 

In  order  to  be  able  legally  to  spend  $70,000,000  of  dock  fimds,  it  was 
necessary  first  that  that  much  money  should  be  released  from  the  prohibitions 
of  the  debt  limit.  The  city  could  borrow  for  "public  improvements"  a  sum 
not  to  exceed  Len  per  cent,  of  the  value  of  taxable  real  estate — and  the 
taxable  value  of  property  had  been  stretched  to  the  breaking  point.  The  tax 
rate  was  as  high  as  the  city  officials  dared  push  it.  THE  MONEY  FOR 
ADDITIONAL  DOCKS  WAS  OBTAINED  THROUGH  THE  PREPARA- 
TION OF  A  REPORT  SHOWING  THAT  $70,000,000  OF  DOCK  BONDS 
WERE  SELF-SUSTAINING— AND  UNDER  A  LAW  THAT  WAS 
RECENTLY  ENACTED,  SELF-SUSTAINING  DOCK  BONDS  WERE 
FREE  FROM  THE  OPERATIONS  OF  THE  DEBT  LIMIT ! 

Of  the  $125,000,000  spent  for  docks,  $50,000,000  was  paid  for  land  along 
the  water  front  which  the  city  or  state  once  owned.  The  balance  was  spent 
for  dock  construction.  The  city  paid  $4,000,000  for  a  strip  of  waterfront 
adjacent  to  the  private  piers  which  it  was  proposed  the  city  should  buy,  and 
it  spent  twice  that  sum  for  land  on  the  west  side,  for  a  series  of  wharves 
which  cost  $15,000,000  to  construct.  The  total  outlay  for  this  "improvement" 
was  $25,000,000. 

From  the  rental  of  these  piers,  the  city  derived  $585,000  a  year.  This 
was  less  than  two  and  one-half  per  cent,  of  the  total  investment.  The  interest 
rate  on  the  bonds,  which  ran  from  thirty  to  fifty  years,  ranged  from  three  to 
five  per  cent.,  the  annual  interest  payment  being  about  $1,000,000.  The  dif- 
ference between  the  rental  and  the  interest  was  the  net  loss  sustained  by  the 
city  on  the  investment.  The  total  loss  included  $250,000  a  year  for  amortiza- 
tion of  the  bonds,  and  $300,000  for  depreciation,  or  an  aggregate  of  $1,000,000! 

This  was  the  price  the  city  paid  for  the  proud  privilege  of  receiving  its 
transcontinental  tourists  at  the  public  wharves.  It  was  the  price  the  city  paid 
to  the  gigantic  shipping  combine  which  leased  the  city  docks  for  twenty  years. 
The  combination  was  formed  by  the  financier  who  headed  the  syndicate 
that  purchased  the  City  Hall  and  who  derived  millions  of  dollars  annu- 
uaUy  from  the  city  by  the  purchase  of  its  revenue  bonds  issued  to 
the  full  amount  of  the  budget  in  anticipation  of  taxes.  The  money  was  left 
with  the  financier  and  with  his  affiliated  banks,  and  was  doled  out  to  the 
city  only  part  at  a  time.  In  spite  of  this  fact,  the  city  paid  interest  on  the  full 
amount  of  the  bonds  issued. 

The  land  for  this  improvement  was  acquired  at  exorbitant  prices  through 
condemnation  commissioners  selected  by  the  politicians  and  appointed  by  the 
courts.     The  awards  for  condemned  parcels  totalled  $7,000,000,  and  were  on 

54 


the  usual  lavish  scale.  The  city  paid  $500,000  interest  on  the  awards  and 
$200,000  to  the  commissioners  and  their  clerical  help.  Some  of  the  largest 
awards  were  paid  to  property  owners  whose  ancestors  acquired  their  holdings 
free  from  the  state  or  the  city,  or  for  only  nominal  sums. 

The  construction  of  the  piers  was  let  to  private  contractors,  selected 
ostensibly  through  fair  competition,  but  actually  through  official  connivance. 
Their  bills  exceeded  a  fair  valuation  of  their  work  by  thirty  per  cent.,  the 
surplus  representing  the  estimated  value  of  political  capital  invested.  It  was 
because  of  the  liberal  profits  on  these  contracts  that  one  former  head  of  the 
Dock  Department  became  the  owner  of  vast  tracts  of  land  in  an  outlying 
borough,  and  a  former  engineer  in  the  department  was  advanced  politically 
apd  financially.  The  engineer  succeeded  to  the  headship  of  the  city's  new 
Water  Board  and  was  subsequently  elected  to  an  important  state  office.  It 
was  confidently  predicted  that  he  would  be  the  choice  of  his  party  for  governor 
the  subsequent  year,  but  this  prediction  failed  of  fulfillment.  The  position  he 
held  in  the  state  enabled  him  to  distribute  vast  patronage  and  contracts  amount- 
ing to  millions  of  dollars. 

The  former  dock  commissioner  was  the  principal  owner  of  a  company  that 
derived  more  than  two  million  dollars  from  dock  contracts.  This  company 
obtained  other  large  city  contracts.  The  former  engineer  was  reputed  to  be 
the  partner  of  a  contractor  who  did  a  great  deal  of  work  for  the  Dock  Depart- 
ment, and  who  later  organized  a  company  to  obtain  the  contract  for  the  con- 
struction of  the  city's  new  subway. 

Dredging  to  the  extent  of  millions  of  dollars  was  done  by  the  city.  Most 
of  the  money  was  paid  to  a  company  that  had  a  virtual  monopoly  of  the 
work.  On  one  contract  the  city  paid  forty-five  cents  a  cubic  yard  for  dredging 
a  large  area  in  which  it  shared  expenses  with  the  federal  government.  The 
government  paid  only  fifteen  cents  a  cubic  yard  for  its  share  of  the  work, 
which  was  performed  by  another  contractor.  The  opportunities  for  over- 
charging on  work  of  this  character  were  unlimited. 

The  financial  history  of  the  docks  just  recited  is  the  same,  only  on  a 
smaller  scale,  of  all  the  other  city-owned  docks.  Their  purchase  and  construc- 
tion were  under  the  same  general  conditions  of  extravagance  and  corruption. 
It  was  not  how  economically  could  the  land  be  acquired  and  the  piers  built, 
or  how  cheap  could  the  docks  be  purchased,  but  what  was  the  maximum  profit 
each  job  could  yield  without  evoking  public  outcry.  There  were  few  excep- 
tions to  this  rule. 

A  striking  illustration  of  how  zealously  the  city's  interests  were  guarded 
by  succeeding  dock  boards  is  contained  in  the  official  records  of  the  Dock 
Department.  The  last  Board  went  out  of  office  ten  years  previous,  and  since 
then  the  department  has  been  ruled  by  a  commissioner.  The  Board  remained 
in  office  four  years,  and  during  that  time  virtually  gave  away  everything  of 
value  within  its  possession  or  on  which  predatory  hand  could  be  laid.  It  leased 
piers  and  bulkheads  to  the  brother  of  one  of  the  board  members  and  it  awarded 
similar  privileges  to  dummies  and  agents  of  themselves  and  other  politicians. 
It  leased  dumping  board  privileges  to  the  brother  of  the  politician  board  mem- 
ber and  to  others,  who  afterward  sublet  them  to  the  city  through  the  Street 

55 


( 


Cleaning  Department  for  several  times  the  rental  they  paid  to  the  Dock  De- 
partment. And  this  was  only  part  of  the  rental  these  politician  leaseholders 
received  for  the  use  of  their  dumping  boards.  Contractors  and  private  ash- 
cart  men  paid  large  fees  for  the  privilege  of  dumping  their  vaste  and  refuse  at 
the  dumping  boards  leased  from  the  city. 

A  dozen  piers  and  bulkheads  were  leased  to  ice  companies  that  formed 
the  gigantic  ice  monopoly.  The  combination  held  the  city  in  its  g^ip  for  years 
and  in  order  that  the  largest  profits  might  be  made  out  of  its  special  privileges, 
it  raised  the  price  of  ice  and  restricted  the  output.  The  public  suffered 
because  of  the  artificial  shortage,  and  those  who  were  unable  to  pay  the 
price  demanded,  went  without  ice.  The  result  was  an  appalling  increase  in 
the  mortality  of  infants  in  the  poorer  quarters  of  the  city,  and  corresponding 
public  discomfort.  Threats  of  violence  and  legal  punishment  were  raised 
against  the  ice  barons. 

Charges  were  made  that  the  city's  own  officials  were  implicated  in  the 
ice  conspiracy,  and  an  investigation  established  the  truth  of  these  assertions. 
It  was  found  that  the  mayor  himself  was  the  beneficiary  of  free  ice  stock  to 
the  extent  of  $500,000.  And  other  city  officials  profited  only  in  lesser  degree. 
The  head  of  the  political  organization  at  that  time,  who  controlled  the  mayor, 
was  also  a  large  stockholder,  as  was  the  politician  member  of  the  Dock  Board. 

Some  of  the  leases  to  the  dock  ring  were  made  through  a  dummy  who 
was  a  clerk  in  the  office  of  a  rising  young  lawyer.  The  lawyer  later  became 
the  recognized  legal  adviser  of  the  political  "boss"  and  when  he  tired  of  political 
mischief,  he  sought  refinement  and  public  distinction  by  elevation  to  the  judi- 
ciary. And  he  was  promoted.  He  had  gained  notoriety  through  the  acceptance 
of  a  fee  of  $45,000  from  the  city  for  services  which  were  characterized  as 
"partly  fictitious,"  and  he  was  an  important  witness  in  a  suit  to  recover  $400,000 
from  the  city  on  a  contract  that  was  never  performed. 

While  the  city  lost  millions  through  the  construction  and  leasing  of  docks, 
it  lost  almost  as  much  through  another  source.  In  the  early  days  of  the  Dock 
Department  and  even  before  that  department  was  formally  organized,  the 
city's  most  valuable  assets  were  its  ferry  franchises.  In  those  earlier  days 
the  city's  population  was  massed  in  the  lower  part  of  the  city  and  the  popula- 
tion of  the  adjoining  communities  was  clustered  along  the  water  front.  The 
only  means  of  inter-communication  was  by  ferry,  and  the  rate  of  transportation 
was  high. 

The  city  leased  these  ferry  franchises  for  sums  that  were  ridiculously  slim, 
and  those  who  obtained  them  were  soon  numbered  among  the  city's  wealthiest 
citizens.  The  records  of  the  Board  of  Aldermen,  which  had  the  franchise- 
giving  power,  show  in  what  manner  some  of  these  leases  were  acquired.  One 
franchise  was  obtained  for  $1,100  a  year  and  for  many  years  produced  only 
that  sum  for  the  city.  A  public  outcry,  coupled  with  the  disclosures  that  the 
franchise  was  obtained  through  bribery,  resulted  in  an  increase  of  the  revenues 
to  $20,000  a  year.  The  rental  remained  at  that  figure  for  forty  years,  and 
was  the  same  when  the  city  collapsed. 

Another  franchise  paid  $800,  while  another  brought  only  $50  a  year. 
These  sums  were  not  increased  until  it  was  discovered  that  the  profits  from 

56 


'% 


{ 


the  leases  were  several  hundred  thousand  dollars  a  year.  They  were  then 
raised  to  $22,500  and  $12,000  respectively.  One  franchise  was  granted  for 
$25,000  a  year  amid  general  public  approbation,  until  it  was  discovered  that 
by  a  subtle  act  of  official  duplicity  on  the  part  of  the  City  Council,  the  rental 
was  reduced  to  $1,400  before  the  lease  became  effective. 

Such  was  the  story  of  the  fraud  in  ferry  franchises  contained  in  the 
official  records.  The  frauds  have  been  repeated  on  a  larger  scale,  but  in 
different  form  ever  since.  There  were  thirty-seven  ferries  in  operation  at 
the  time  of  the  city's  financial  collapse,  producing  an  annual  income  of  $300,- 
000.  For  many  years  prior,  the  income  was  under  $100,000.  The  city's  total 
receipts  from  privately  operated  ferries  was  more  than  wiped  out  each  year 
by  the  deficit  in  its  own  ferry  operations.     The  deficit  was  over  $700,000  a  year. 

The  city  had  paid  $2,000,000  for  two  ferry  companies  whose  main  assets 
were  wooden  hulks  that  were  unsafe  for  use.  It  spent  $2,000,000  for  new 
ferry  boats,  and  it  paid  $2,000,000  for  new  terminals.  In  all,  it  spent  $15,000,- 
000  for  its  own  ferries,  the  income  from  which  was  a  deficit  of  $700,000  a  year 
besides  interest  on  the  bonds.  This  amounted  to  $600,000  a  year.  At  least 
$100,000  had  to  be  put  aside  for  depreciation  of  property;  the  total  annual  loss 
on  ferries,  therefore,  being  $1,400,000. 

The  city  had  other  losses  on  ferries  besides  those  mentioned.  Its  income 
was  largely  reduced  through  the  payment  of  a  subsidy  of  $130,000  a  year  to 
one  ferry  company  operating  on  the  river,  which  claimed  a  private  loss  due 
to  bridge  improvement.  And  besides  the  subsidy,  the  city  was  buying  a  parcel 
of  land  from  the  company  for  which  the  company  claimed  a  value  of  $3,000,- 
000.  The  city's  contention  was  that  the  land  was  worth  but  a  minute  fraction 
of  that  sum  and  that  it  was  originally  acquired  from  the  state  for  $50.  The 
condemnation  commissioners,  however,  appointed  by  the  court,  one  of  whom 
was  an  intimate  friend  of  the  city's  chief  executive,  awarded  $1,500,000  for 
the  property. 

The  city's  losses  on  its  ferry  investment  was  by  no  means  confined  to  the 
deficit  in  operation  and  to  the  interest  payment  on  the  bonds,  and  depreciation 
charges.  It  was  supplemented  by  the  petty  peculations  of  its  ferry  employees 
who,  in  the  several  years  of  municipal  operation,  stole  thousands  of  dollars.  It 
was  estimated  that  the  aggregate  of  these  thefts  was  over  $100,000. 

Similar  thefts  were  perpetrated  on  the  city  docks,  the  temporary  rentals 
for  which  were  collected  by  dockmasters  who  were  liberally  paid.  These 
dockmasters,  it  was  officially  reported,  collected  rents  from  temporary  wharfage 
and  for  stand  permits,  that  were  never  turned  into  the  city.  The  aggegate  of 
these  thefts  in  the  forty  years  of  the  Dock  Department,  aggregated  $1,000,000, 
there  being  thirty  dock  masters  and  a  known  annual  wharfage  and  rental  of 
over  $200,000. 

None  of  these  offenders,  however,  was  punished.  One  dockmaster  for 
whom  a  warrant  was  issued  by  the  mayor  himself,  amid  loud  newspaper 
acclaim,  was  a  relative  of  a  leading  politician.  He  became  a  fugitive  for 
awhile  with  another,  and  when  the  excitement  blew  over  he  returned  to  the  city 
and  to  the  privileges  of  free  citizenship.  Neither  he  nor  any  other  offender 
in  the  department  was  criminally  punished. 

There  were  many  other  a\enues  of  public  waste  in  this  department.    The 

57 


A 
4 

H 


city  spent  $300,000  a  year  for  fuel  for  ferry  boats  and  it  spent  $50,000  a  year 
for  music  at  the  recreation  piers.  The  fuel  was  purchased  from  favored  con- 
tractors and  the  music  was  supplied  by  musicians  picked  by  the  politicians  in 
the  districts  where  the  recreation  piers  were  located.  The  payroll  of  the 
musicians  was  padded  with  dummies. 

The  city  paid  many  thousands  of  dollars  for  asphalt  pavement  along  the 
marginal  water  front  and  it  paid  many  thousands  of  dollars  for  lumber,  rope, 
machinery,  broken  stones  used  in  dock  construction,  including  sand  and  gravel. 
There  was  waste  in  the  purchase  of  all  these  materials,  and  there  was  a  waste 
of  several  hundred  thousand  dollars  alone  in  salaries  to  useless  political  em- 
ployees. The  waste  in  salaries  in  this  department  was  on  a  par  with  that  of 
other  departments  where  the  average  waste  was  estimated  by  the  city's  former 
financial  officer  at  over  twenty-five  per  cent.  The  department  carried  2,500 
employees  on  its  payroll  at  an  annual  expense  of  over  $2,000,000,  the  waste  on 
a  twenty-five  per  cent,  basis  being  $500,000. 

One  incident  and  the  story  of  the  mismanagement  and  graft  in  this  de- 
partment is  finished.  When  the  city  constructed  its  chain  of  West  Side  piers 
for  the  benefit  of  the  shipping  combine,  it  provided  electric  elevators  for  the 
conveyance  of  passengers  to  the  upper  tier.  The  contract  for  the  construction 
of  these  elevators  was  let  at  a  cost  of  $150,000,  which  was  $40,000  more  than 
a  reasonable  sum,  according  to  the  statement  made  in  writing  to  the  city's 
chief  executive.  The  writer,  who  was  an  expert  of  thirty  years'  standing  in 
the  elevator  business,  offered  to  prove  his  assertions  to  the  mayor,  but  his 
offer  was  never  accepted. 

SUCH  IS  THE  STORY  OF  THE  CITY'S  WASTE  ALONG  THE 
WATER  FRONT.  WERE  THE  MILLIONS  SPENT  FOR  DOCK  IM- 
PROVEMENTS, HONESTLY  ADMINISTERED,  THE  CITY'S  INCOME 
FROM  ITS  DOCKS  WOULD  NOW  BE  SUFFICIENT  TO  DEFRAY  NOT 
ONLY  THE  COST  OF  THE  DOCK  DEPARTMENT,  BUT  A  LARGE 
PART  OF  THE  COST  OF  GENERAL  ADMINISTRATION  AS  WELL; 
AND  THE  RENTAL  FOR  THE  CITY'S  DOCKS  NEED  NOT  HAVE 
EQUALLED  THOSE  DEMANDED  BY  PRIVATE  CAPITAL.  THE 
TOTAL  WASTE  IN  DOCK  FUNDS,  INCLUDING  THAT  PART  PAID 
OUT  ANNUALLY  FOR  RUNNING  EXPENSES,  IN  THE  PAST  FORTY 
YEARS,  IS  CONSERVATIVELY  ESTIMATED  AT  $50,000,000. 


58 


CHAPTER  VIII 
THE  CORRUPTION  OF  THE  CITY'S  POLICE 

When  the  Metropolitan  Police  force  was  established  fifty  odd  years  ago, 
Its  purpose  was  to  protect  the  lives  and  property  of  the  citizens  who  bore  the 
expense  of  its  maintenance  and  who  felt  the  need  of  its  protection.  The  force 
grew  in  size  from  a  mere  handful  of  interested  fellow  citizens  to  an  army  of 
more  than  ten  thousand  men,  when  the  financial  safety  of  the  city  became 
imperilled.  Their  ranks  had  grown  with  the  increase  in  the  size  and  popula- 
tion of  the  city  and  with  the  growth  of  other  city  departments,  and  their 
efficiency  was  expected  to  be  at  least  on  a  par  with  that  of  their  predecessors 
at  the  time  the  force  was  first  created. 

Their  total  annual  salaries  aggregated  $15,000,000,  ranging  from  $800  a 
year  for  the  lowest  grade  to  $7,500  for  the  head  of  the  department ;  and  only 
a  fev/  years  before  the  city's  collapse,  the  salaries  of  some  of  the  grades  were 
increased  and  the  Commissioner  himself  was  seeking  an  advance  to  $10,000. 
Charges  were  made  that  the  increases  had  been  purchased  and  that  funds 
were  raised  to  pay  politicians  for  their  "influence"  over  city  officials.  One 
of  these  attempts  to  "influence"  those  on  whom  authority  for  increase  was 
conferred,  was  discovered  a  few  years  before  while  the  commission  to  revise 
the  city's  charter  was  in  session.  A  fund  of  $50,000  was  raised  by  the  mem- 
bers of  the  force  to  engage  counsel  "friendly"  to  the  commission.  The  chair- 
man of  the  commission,  when  informed  of  the  fact,  ordered  the  books  of  the 
associations,  embracing  the  various  grades  of  policemen,  brought  before  him 
and  when  the  truth  of  the  suspicion  was  confirmed,  ordered  the  money  re- 
turned to  those  who  subscribed  to  the  fund.  The  desired  increases  were  not 
granted. 

While  the  ranks  of  the  department  grew  and  efficiency  was  sought  in 
increased  ratio,  a  vice  was  bred  in  the  higher  quarters  which  for  a  quarter 
of  a  century  paralyzed  the  usefulness  of  the  men  in  the  ranks.  It  checked 
the  zeal  of  faithfulness  and  gave  encouragement  to  the  arm  of  incompetency 
and  neglect  where  the  interest  of  corruption  held  sway.  Honesty  was  dis- 
couraged and  the  enforcement  of  law  was  restrained  where  law  breaking 
was  personally  profitable  to  those  who  "controlled"  the  department. 

It  is  but  fair  to  say  that  responsibility  for  this  condition  was  lodged  only 
in  the  small  percentage  of  police  corruptionists  who  dominated  the  force 
and  not  in  the  rank  and  file  of  uniformed  men,  who  obeyed  the  commands 
of  their  superiors  for  the  safety  of  their  own  positions.  It  was  the  five  per 
cent,  who  stole  and  demoralized  the  force,  and  not  the  ninety-five  per  cent, 
who  performed  their  duties  honestly,  but  within  the  limitations  of  zeal  pre- 
scribed by  the  men  "higher  up."  Vice  was  profitable,  therefore  vice  flourished ; 
so  was  gambling,  both  honest  and  crooked,  as  were  other  forms  of  law  break- 

59 


i 


Ml 


ing  that  yielded  princely  incomes  to  those  in  official  position  who  permitted 
them  to  flourish. 

Sometimes  law  was  spasmodically  enforced  by  the  police  either  because 
a  police  corruptionist  sought  revenge  on  an  offending  law  breaker  for  per- 
sonal or  business  spite;  or  because  reform  agencies  were  discovered  ready 
to  spring  a  trap  on  delinquent  and  conniving  officials.  On  other  rare  occa- 
sions a  lone  policeman  or  group  of  them  might  undertake  for  fancied  or  real 
grievance  against  their  superiors,  to  enforce  the  law  on  their  own  account 
without  artificial  restraint.  At  such  times,  the  outburst  of  police  zeal  was 
quickly  suppressed  and  the  recalcitrant  policemen  punished. 

When  the  city  became  bankrupt,  official  knavery  in  the  Police  Depart- 
ment was  at  its  height.  Vice  was  rampant,  gambling  was  flagrant,  rowdyism 
was  unchecked,  saloons  were  unlicensed  in  many  places  and  frauds  were 
perpetrated  on  the  general  public  with  the  knowledge  and  connivance  of  the 
men  "higher  up."  Wire  tapping  had  been  a  lucrative  form  of  public  decep- 
tion and  in  the  space  of  a  dozen  years  a  total  of  at  least  ten  million  dollars 
was  stolen  in  the  city  from  an  unwary  public  by  this  means.  The  fraud  was 
profitable  not  only  for  those  who  practised  it,  but  to  some  men  high  in  political 
life  who  shared  the  plunder  and  shielded  those  engaged  in  its  pursuit. 

Wire  tapping  was  not  the  only  form  of  swindling  that  flourished  through 
police  connivance.  The  sale  of  green  goods  was  also  tolerated.  This  business 
was  profitable  at  an  earlier  stage  before  wire  tapping  set  in,  and  flourished 
to  such  an  extent  that  its  suppression  became  inevitable.  It  lasted  for  a  decade 
and  only  those  of  political  strength  who  engaged  in  the  fraud  were  safe  from 
police  molestation.  As  the  ranks  of  the  green  goods  men  became  depleted, 
those  of  the  wire  tappers  were  swelled,  and  with  wire  tapping  came  other 
forms  of  "confidence"  swindles. 

One  noted  wire  tapper,  McNutt  by  name,  was  lodged  in  prison  after  a 
long  career  of  crime.  He  himself  had  estimated  the  profits  of  his  frauds 
at  four  million  dollars  and  his  detection  came  only  because  of  his  disagree- 
ment with  a  woman.  The  woman  was  of  wealthy  family,  highly  bred,  and 
her  association  with  the  confidence  man  began  after  she  herself  had  been 
robbed.  She  had  invested  several  thousand  dollars  in  a  non-explosive  tank 
which  the  wire  tapper  claimed  to  have  invented,  and  her  interest  in  the  in- 
vention led  her  to  business  relations  with  the  "confidence  man."  The  latter 
had  secured  official  endorsement  of  his  worthless  invention  from  the  Fire 
Commissioner  of  the  city  after  a  test  by  the  Fire  Department  of  its  false 
"practicability.**  The  test  was  made  at  the  expense  of  the  city;  the  endorse- 
ment scattered  broadcast,  and  at  the  end  of  the  whole  performance,  acceded 
in  by  the  city's  own  commissioner,  the  fraud  was  exposed  and  the  swindle 
checked. 

It  was  the  pursuit  of  the  vengeful  woman  that  ended  the  glory  of  the 
wire  tapper's  career,  and  it  was  not  until  the  relationship  was  exposed  be- 
tween the  wire  tapper  and  his  protecting  political  ally,  that  the  reason  for 
his  success  was  made  known.  The  politician  had  shared  in  the  profits  of  the 
swindle  just  as  he  and  others  of  his  tribe,  had  gathered  in  the  proceeds  of  the 
green  goods  men  and  gamblers  who  infested  the  city  and  ran  rampant 
throughout. 

60 


The  proceeds  of  this  political  coterie  and  their  swindling  allies  in  the 
quarter  of  a  century  of  their  power,  were  at  least  $1,000,000  a  year.  The 
total  amount  of  the  frauds  perpetrated  by  the  swindlers  and  encouraged  and 
defended  by  their  political  associates,  was  greatly  in  excess  of  that  figure. 

Gambling  was  by  far  the  most  profitable  of  these  swindling  indulgences, 
first,  because  it  was  more  extensive,  and  second,  because  it  was  carried  on 
in  every  quarter  of  the  teeming  city  and  without  serious  police  interruption. 
The  force  was  controlled  to  a  man  by  the  discerning  and  artful  politicians, 
and  when  a  new  administration  was  elected  to  power  the  cessation  of  gambling 
was  only  temporary.  The  profits  of  the  game  were  so  great  that  the  cor- 
rupting politicians  were  usually  able  to  induce  the  newly  appointed  officials 
to  share  the  "spoils"  with  them. 

It  was  in  this  way  that  from  five  to  ten  million  dollars  a  year  were  ex- 
tracted from  the  pockets  of  the  poor  and  unfortunate,  who  were  weak  in 
their  conduct  and  wrong  in  there  indulgences,  and  from  the  purses  of  the 
rich  who  were  snared  into  the  pastime  by  the  wiles  of  their  enticing  friends. 

Gambling  corrupted  the  city  at  its  core  and  ruined  the  homes  of  many 
men.  It  inflicted  hardship  on  the  lives  of  children  and  imposed  misery  on 
their  parents.  It  carried  sorrow  to  the  hearts  of  mothers  and  resulted  in 
self-destruction  for  some  of  them.  All  together  it  was  an  evil  that  caused 
untold  sorrow  and  hardship  and  the  profits  of  its  promoters  were  blood  and 
gold. 

Such  was  the  toll  of  gambling.  Greed  inspired  it  and  greed  carried  the 
gambler  to  his  ruin.  •»  The  politician,  however,  made  the  profit,  and  made  it 
in  more  ways  than  one.  A  former  chief  of  police,  who  was  the  controlling 
arm  of  the  political  gambling  ring  at  one  period  of  the  city's  existence,  ac- 
knowledged once  that  four  million  dollars  were  the  annual  toll  of  police  "pro- 
tection" from  gamblers  in  the  metropolis.  He  did  not  include  the  profits  de- 
rived by  the  promoters  of  the  gambling  games.  He  spoke  only  of  the  illicit 
gains  of  the  police  and  the  politicians  who  sold  "protection." 

The  town  was  then  "wide  open"  and  each  gambling  house  was  obliged 
to  pay  a  certain  sum  of  money,  from  $100  to  $1,000  a  month,  for  "protection." 
It  was  also  compelled  to  pay  a  share  of  the  net  profits  to  a  certain  political 
ring  and  besides  that,,  it  was  obliged  to  carry  from  one  to  a  dozen  persons 
on  the  payroll  of  its  establishment  for  political  purposes.  The  men  who  drew 
renumeration  for  "services"  thus  arbitrarily  imposed,  were  camp  followers 
of  the  politicians,  who  helped  to  maintain  their  patrons  in  office  and  in  political 
power  by  the  exercise  of  fraud  on  election  day,  when  the  suffrages  of  the 
people  were  offset  and  defeated  by  the  crimes  of  election  crooks. 

Such  was  the  history  summed  up,  of  the  effect  of  gambling  on  the 
peoples'  rights,  and  such  was  the  method  by  which  these  rights  were  polit- 
ically denied.  When  an  occasional  awakening  roused  the  people  to  political 
revolt,  the  politicians  and  their  followers  were  usually  defeated  at  the  polls, 
but  the  effect  of  the  uprising  soon  wore  off  and  the  vigilance  of  the  citizen 
relaxed.  The  result  was  that  seldom  were  the  profits  of  gambling  seriously 
diminished  through  continued  police  activity.  The  profits  of  gambling  houses, 
aside  from  the  money  paid  for  "protection,"  were  sometimes  shared  directly 
by  politicians,  and  this  sum,  with  the  aggregate  paid  for  "protection"  totalled 

61 


i 


not  less  than  ten  and  sometimes  more  than  twenty  million  dollars  each  year 
of  police  inactivity! 

Save  for  the  small  percentage  of  industrious  men,  the  great  mass  of 
people  in  the  city  were  poor  and  what  little  they  saved  from  the  temptations 
of  gambling  were  scattered  to  the  winds  by  the  vice  of  drink  and  by  the 
allurements  of  policy-playing.  This  latter  was  another  contrivance  of  dia- 
bolical money  making,  rigged  by  the  crafty  politicians  who  on  the  one  hand 
"served"  their  "constituents"  by  providing  them  with  occasional  aid  or  suc- 
cor, while  on  the  other  hand  they  set  the  bait  that  deprived  them  of  all  their 
worldly  possessions  and  kept  them  continually  poor. 

Policy  was  the  most  insidious  of  all  the  vices  invented  by  a  sordid  crew 
that  lived  off  the  toil  of  their  unhappy  brethren.  It  enslaved  the  women  as 
well  as  the  men  and  it  made  victims  of  the  children  who  carried  the  paltry 
earning  of  their  parents  to  the  policy  shops.  The  children  were  the  aides  of 
their  mothers  in  the  prosecution  of  the  game,  which  left  them  without  even 
the  means  of  subsistance.  Usually  the  savings  of  a  family  were  systematically 
squandered  in  this  manner  by  a  hapless  mother  and  the  result  left  its  mark 
on  the  entire  family.  The  rich  as  well  as  the  poor  were  ensnared  by  the 
game.  Fortunately  at  one  period  of  the  reign  of  policy  playing,  a  crusade 
was  inaugurated  which  wiped  out  a  large  part  of  the  profits  of  the  game.  A 
merchant  of  prominence,  imbued  with  the  spirit  of  charity  and  moved  by  the 
feeling  that  overcame  him  at  the  sight  of  its  hapless  victims,  inaugurated  a 
movement  to  stop  the  wretched  swindle. 

He  gathered  around  him  a  staff  of  agents,  and  while  some  of  them  ob- 
tained evidence  against  the  policy  dens,  others  crusaded  with  a  violence  that 
tore  the  dens  to  pieces.  These  places  were  set  in  the  poorest  quarters  of  the 
city  so  that  convenience  of  locality  might  be  an  added  inducement  to  those 
unfortunate  women  who  could  be  tempted  to  play.  The  crusades  were  suc- 
cessful and  policy  playing  was  continued  only  in  a  moderate  way  for  many 
years  thereafter  until  the  swindle  succumbed  through  lack  of  support.  The 
victims  became  aware  of  the  futility  of  their  efforts  to  profit  by  the  game 
and  gradually  their  number  diminished  and  the  profits  disappeared. 

But  while  policy  playing  ceased  through  no  fault  of  the  police  but  through 
the  efforts  of  private  individuals,  auction  swindles  and  fortune  telling  shams 
were  permitted  to  flourish  and  to  entrap  their  victims.  Autioneers  "faked" 
their  wares  and  fortune  tellers  deceived  their  clients  with  tales  of  preposter- 
ous prophecy.  The  shams  of  these  practitioners  were  sanctioned  by  the 
police  clothed  with  the  power  and  charged  with  the  duty  of  their  supression. 
Occasionally  an  auctioneer,  too  flagrant  in  the  fraud,  was  complained  of  by 
an  obstinate  victim  and  his  license  revoked,  not  by  the  police  but  by  the  civil 
authorities.  One  such  incident  occured  when  an  auctioneer,  who  had  flour- 
ished conspicuously  for  many  years  in  the  upper  part  of  the  city,  was  de- 
tected in  the  fraud  by  an  irate  victim  who  retaliated  for  the  deception  by 
prosecuting  the  auctioneer  before  the  licensing  authority.  The  victim  claimed 
to  have  been  swindled  out  of  $7,000  on  one  transaction  involving  the  purchase 
of  pictures  and  furniture.  The  police  were  known  to  be  "friendly"  with  this 
particular  auctioneer  who,  no  sooner  was  his  license  revoked,  than  he  trans- 

62 


ferred  his  auctioneering  privileges  to  an  associate  and  the  business  was  con- 
tinued without  interruption. 

This  is  only  one  phase  of  the  auctioneer  frauds  blinked  at  by  the  police. 
More  flagrant  than  these  are  the  swindling  practices  of  those  auctioneers 
who  rent  stores  in  the  crowded  thoroughfares  and  who  by  means  of  "claques" 
and  other  factitious  device  entice  the  unwary  'vho  step  in  from  the  sidewalk, 
to  profitable  deception.  The  profits  of  the^e  "fake"  auction  sales  exceed 
$3,000,000  a  year  and  are  swelled  before  holiday  seasons  when  $2.00  watches 
are  sold  for  $25.00  and  $50.00,  and  when  imitation  silverware,  spurious  pic- 
tures and  other  meretricious  articles  are  sold  as  genuine.  The  victims  of 
these  frauds  number  thousands  annually,  and  the  licenses  are  issued  by  the 
city  authorities  with  the  connivance  of  the  police,  who  obtain  presents  from 
auctioneers  and  who,  if  they  performed  their  duty,  would  raid  an  occasional 
auction  house  and  cart  away  its  fraudulent  goods.  The  "claque,"  who  are 
paid  for  their  services  at  the  rate  of  $2.00  and  $3.00  a  day  each,  might  then 
be  compelled  to  seek  legitimate  employment. 

For  the  purpose  of  detecting  and  preventing  robberies,  the  city  main- 
tained a  Detective  force  composed  of  the  "pick"  of  the  police  and  trained 
in  the  detective's  art.  These  men,  more  than  six  hundred  in  number,  were 
scattered  throughout  the  city,  directed  mainly  from  headquarters  and  were 
especially  deputized  to  carry  their  instinct  into  the  inmost  field  of  crime. 
Some  of  these  men  were  assigned  to  duty  on  street  cars,  subway  and  elevated, 
and  were  especially  designated  for  the  task  of  detecting  pick-pockets  and 
preventing  their  operations.  In  spite  of  this  special  detail,  pocket-picking 
was  most  prevalent  during  the  last  few  years  of  the  city's  financial  solvency. 
One  of  the  reasons  for  this  was  that  the  city's  chief  executive  had  stringently 
ruled  that  no  "suspicious"  persons  be  arrested  and  the  known  and  suspected 
pick-pockets  were  not  interfered  with  though  their  operations  might  begin  the 
next  moment.  An  illustration  of  this  condition  occured  one  day  when  an 
old  time  detective,  who  had  been  transferred  from  the  Bureau,  counted  seven 
pick-pockets  in  a  downtown  station  of  the  underground  railway  in  the  "rush" 
hour  and  left  them  to  their  own  enjoyment. 

"What's  the  use  of  picking  them  up,"  he  thought,  "if  all  I  get  for  it  is 
a  *call  down'  or  a  rebuke  from  the  mayor  himself." 

The  crooks  had  been  encouraged  by  the  action  of  several  of  their  tribe 
who  complained  to  the  mayor  of  police  "persecution."  The  mayor  in  turn 
ordered  the  police  to  desist  from  arresting  persons  on  "suspicion."  The 
mayor,  when  a  member  of  the  judiciary,  had  won  the  esteem  of  those  who 
profited  through  the  encouragement  of  vice  and  the  sale  of  police  "protec- 
tion." At  one  time  when  the  notorious  "collector"  for  a  police  official  was 
convicted  of  corruption,  the  honored  jurist  was  found  ready  and  willing  to 
grant  a  judicial  stay.  When  an  election  crook  and  divekeeper  was  sentenced 
for  the  crime  of  fraudulent  voting,  the  aid  of  the  jurist  was  obtained  to  stay 
his  sentence.  The  aid  of  the  jurist  was  also  obtained  to  give  a  cachet  of  virtue 
to  an  immoral  resort  that  was  operated  by  the  most  notorious  woman  in  the 
annals  of  the  city.  The  police,  at  the  instigation  of  a  reform  commissioner, 
were  obliged  to  suppress  the  resort.  When  the  divekeeper  complained  of  police 
oppression  the  jurist  himself  visited  the  place  and  approved  of  its  "goodness." 
He  ordered  the  police  withdrawn  and  intimated  that  their  activities  were  for 

63 


purposes  of  blackmail.  The  evidence  on  which  the  resort  was  finally  closed 
was  obtained  by  the  police  on  the  same  night  that  the  jurist  was  entertained 
by  the  notorious  divekeeping  woman  on  his  judicial  visit. 

This  is  only  one  of  the  illuminating  spots  in  police  annals  that  serves  to 
accentuate  the  usefulness  of  the  police  when  the  inspiration  of  duty  is  obeyed. 
The  failure  of  the  police  to  detect  or  prevent  crimes  of  burglary  and  highway 
robbery  that  were  perpetrated  was  due  first  to  the  fact  that  the  detective 
bureau  was  composed  of  incompetent  men,  some  of  whom  were  raised  to 
front  rank  through  improper  political  influences  and  others  who  were  put 
there  for  more  cogent  reasons.  The  salary  of  these  first-grade  detectives 
was  the  same  as  that  of  the  police  lieutenants,  and  some  of  them  were  in  the 
department  only  a  few  years. 

There  were  other  avenues  in  the  Police  Department  through  which  the 
public  money  was  wasted.  There  were  a  million  dollars  spent  each  year  for 
repairs  for  old  and  new  station  houses  and  there  were  hundreds  of  thousands 
of  dollars  spent  for  the  purchase  of  new  horses  at  fancy  prices  and  for  the 
supply  of  feed  and  other  provisions  for  the  Department.  There  were  thou- 
sands of  dollars  spent  for  automobiles  for  use  of  police  officials,  and  the 
recent  purchase  of  two  small  runabout  automobiles  showed  how  the  city  was 
discriminated  against  in  the  matter  of  price  by  the  manufacturer.  The  city 
paid  $750  for  each  runabout,  when,  only  a  few  days  before,  the  same  automo- 
biles were  sold  by  the  manufacturer  to  an  adjoining  city  for  $550  each.  In 
the  matter  of  repairs  in  precinct  station  houses,  the  city  was  overcharged 
from  ten  to  two  hundred  per  cent.  In  one  precinct  in  an  outlying  section 
of  the  city  where  the  actual  value  of  the  repairs  was  $5,000,  the  sum  paid 
was  $15,000.  This  ratio  of  the  cost  to  the  value  of  the  work  done  was  not 
unusual.     These  overcharges  aggregated  many  thousands  of  dollars  a  year. 

The  Police  Department  also  purchased  a  "training  ground"  for  decrepit 
horses  when  the  city's  funds  were  low.  The  profits  of  the  sales  agents  were 
enormous.  The  training  ground  was  acquired  for  $100,000,  and  was  trans- 
ferred to  another  department  a  few  years  later  because  no  use  for  the  prop- 
erty could  be  found.  Those  who  sold  the  property  to  the  city  profited  to  the 
extent  of  many  thousands  of  dollars. 

The  result  of  all  this  mismanagement  in  the  Police  Department  was  the 
enrichment  of  those  who  served  the  city  as  police  executives  and  the  debase- 
ment of  the  people  themselves.  One  former  head  of  the  police  force  retired 
at  fifty  years  of  age  with  a  fortune  of  more  than  $1,000,000.  Others,  whose 
corruption  was  less  profitable,  left  the  department  on  comfortable  pensions 
with  from  $200,000  to  $1,000,000  within  their  personal  grasp.  One  sancti- 
monious police  official,  who  had  reached  the  rank  only  of  captain,  had  enriched 
himself  to  the  extent  of  $250,000,  and  he  was  still  profiting  from  graft  when 
the  city  became  insolvent.  He  owns  valuable  parcels  of  property  in  and  out  of 
the  city  and  his  daughters  draw  pay  as  teachers  in  the  public  schools.  His 
profit  in  three  years  of  vice  in  one  precinct  was  $150,000. 

The  wealth  of  another  police  official  was  disclosed  when  the  latter's  wife 
brought  suit  against  him  in  the  court  for  an  accounting.  She  was  suing  for 
separation  because  of  her  husband's  misconduct,  and  when  the  suit  was  tried 
it  was  found  that  he  owned  fifty  separate  parcels  of  property  in  the  city  and 
that  his  personal  wealth  aggregated  $100,000.    Another  illustration  of  the 

64 


quick  profits  of  corruption  on  the  police  force  was  the  career  of  one  policeman 
Tho  had  acted  as  "wardman"  for  an  official  still  in  the  department.  The 
"wardman"  had  been  but  twelve  years  on  the  force  and  was  operating  several 
saloons  in  the  names  of  relatives  while  drawmg  pay  for  police  duty.  When 
hVs  position  as  official  collector  was  in  peril  of  public  exposure,  he  wa 
promptly  retired  and  the  peril  ceased.  He  still  draws  a  pension  from  the 
Polke  Department,  though  his  business  as  saloonkeeper  has  been  extended 
and  his  wealth  is  estimated  at  more  than  $200,000. 

THUS  IT  IS  SEEN  THAT  WHILE  THE  CITY  WAS  BEING  PIL- 
LAGED   THE  PILLAGERS  IN  AT  LEAST  ONE  BRANCH  OF  THE 
GOVERNMENT  WERE  BECOMING  RICH.    THE  HASTY  PROFITS 
OF   THEIR   PROFESSION    EXPLAIN   WHY   IT   IS   THAT,   UNDER 
OATH     PREVIOUS    POLICE    OFFICIALS    CONFESSED    BEFORE 
A    LEGISLATIVE    INVESTIGATING    COMMITTEE    THAT    THEY 
WERE  ASSESSED  VARIOUS  SUMS  FROM  $500  TO  $15,000  FOR  PRO- 
MOTION   IN    THE    DEPARTMENT.    ONE    CAPTAIN    CONFESSED 
THAT  HE  PAID  THE  TOP  NOTCH  FIGURE  TO  REACH  THE  RANK 
WHICH  HE  HELD,  AND  THE  CONFESSIONS  OF  OTHERS  SHOWED 
THAT    SUMS    RANGING    FROM   $300   UP   WERE    ACCEPTED    BY 
THOSE  IN  THE  DEPARTMENT  WHO  SOLD  PROMOTIONS.    THE 
PROFITS   OF  THE  JOB   WERE   PLAINLY   APPARENT.    CORRUP- 
TION WAS  THE  VICE  THAT  BROKE  THE  DISCIPLINE  OF  THE 
ENTIRE  FORCE.    IT  WAS  THE  SAME  HERE  AS  IN  OTHER  DE- 
PARTMENTS EXCEPT  THAT  ITS  EFFECT  ON  THE  WELFARE  OF 
THE  COMMUNITY  WAS  MORE  DAMAGING. 


4' 


65 


8 


O   ^ 

si 

2. a 

§2 

5  !^ 

o  a 

Ctf     O 
Ml     ^ 

O    10 

u    ^ 

^   u 
S  o 

V    o 

4->     4-* 

S  2 

•a  « 

o  -^ 

»*<   rt 

u  .B 

s-s 

o  ^      , 

2  c  5Q 


rn        « 


(0        S 

5  te  O 

a  3  Q 

CO     rt 

£fg2 


n 


H    rt    CO 

I;  « 


66 


CHAPTER  IX 
THE  CITY'S  HEALTH  BARTERED  FOR  GOLD 

At  the  time  of  the  city's  collapse,  the  Health  Department  was  in  the 
control  of  a  commissioner  who  had  previously  been  at  the  head  of  that 
branch  of  city  government.  In  the  ten  years  that  he  was  out  of  office,  he 
had  established  himself  at  the  head  of  a  chemical  laboratory  which  bore  his 
name  and  which  derived  its  income  from  those  food  and  drink  purveyors 
who  came  within  the  jurisdiction  of  the  Health  Department.  In  this  way  he 
established  a  profitable  business  and  was  the  "official"  chemist  of  the  large 
milk  dealers,  candy  manufacturers,  purveyors  of  household  oils  and  lard,  ice 
cream  manufacturers,  egg  and  poultry  dealers  and  large  dealers  in  prac- 
tically every  other  foodstuff  whose  sale  was  subject  to  the  approval  ot  the 

Health  Department. 

For  ten  years  the  former  Health  Commissioner  hved  on  the  profits  de- 
rived from  his  professional  services  to  these  large  providers  of  city  food. 
His  selection  as  Health  Commissioner  was  therefore  not  expected  by  those 
who  followed  the  course  of  sanitary  events  in  the  city,  in  the  mterest  ot 

the  public  welfare.  .    .  r  «      • 

The  Commissioner's  laboratories  had  organized  an  association  ot     sani- 
tary milk  dealers,"  and  the  association  held  its  meetings  in  the  laboratory. 
An  employee  of  the  laboratory  was  secretary  and  organizer  of  the  associa- 
tion and  the  laboratories  were  specially  retained  by  the  association  to  look 
after  its  interest  with  the  Health  Department.     This  association  comprised 
the  largest  milk  dealers  in  the  city,  and  their  aim  was  to  create  a  demand  for 
"pasteurized"  milk.     Pasteurized  milk  was  sold  at  an  advance  of  a  few  cents 
per  quart  over  unpasteurized  milk,  and  these  milk  dealers  were  anxious  also 
to  raise  the  price  of  bottled  milk  to  nine  and  ten  cents  a  quart  and  to  do 
away  with  the  sale  of  milk  from  cans  entirely.     Three-quarters  of  the  poor 
people  obtained  their  milk  from  large  cans  in  nearby  grocery  stores,  and  this 
milk  was  almost  invariably  boiled  before  using.     This  boiling  process  made 
the  "dipped"  milk  about  as  safe  for  family  use  as  the  "pasteurized    or    cer- 
tified" milk,  and  the  price  for  "dipped"  milk  was  only  half  that  of  each  of 
the  other  two.    This  might  have  been  one  of  the  reasons,  aside  from  the  other 
reasons  set  forth  by  the  head  of  the  laboratory  after  he  was  reappointed  as 
Health  Commissioner,  why  the  sale  of  "dipped"  or  can  milk  was  inhibited  in 
the  city.    Compulsory  pasteurization  would  also  accrue  to  the  profit  of  an  offi- 
cial of  the  Health  Department  who  had  invented  a  home  "pasteurizer"  whose 
sale  was  aided  by  the  milk  regulation. 

No  sooner  was  the  Commissioner  appointed  to  office  than  it  was  realized 
that  his  professional  service  as  expert  chemist  to  the  various  food  and  milk 

67 


It 


dealers  was  not  at  all  in  harmony  with  his  services  to  the  public  by  which  he 
was  employed.  One  of  the  first  evidences  of  this  fact  was  observed  soon  after 
the  laboratory  chemist  became  Commissioner,  when  the  association  of  "sani- 
tary milk  dealers"  petitioned  the  Commissioner  f')r  a  modification  of  the  milk 
regulations,  which  was  granted. 

First,  they  wanted  the  double  inspection  system  in  the  milk  dairies, 
whence  the  city's  supply  of  fresh  milk  came,  modified  and  simplified  so  that 
only  one  inspector  would  visit  the  dairy.  Heretofore  there  had  been  double 
inspection  as  a  check  on  the  dairies  and  on  the  inspectors,  it  being  authori- 
tatively claimed  that  the  greatest  danger  from  disease  lurked  in  ''unclean" 
milk.  One  of  their  reasons  for  this  modification  was  that  the  visit  of  more 
than  one  inspector  to  a  dairy  only  "confused"  the  dairyman  and  caused 
him  to  divert  his  supply  of  milk  to  another  market.  A  "uniform"  method  of 
inspection  was  urged. 

Another  regulation  which  this  association  of  "sanitary  milk  dealers" 
wanted  modified  was  that  which  provided  for  the  removal  of  manure  from 
the  cow  sheds  before  milking.  The  "sanitary  milk  dealers"  wanted  this 
cleaning  done  after  milking,  because  it  compelled  the  dairyman  to  rise  "too 
early." 

"It  is  our  opinion,"  they  gravely  said,  "that  a  cleaner  milk  would  result 
from  milking  the  cows  before  cleaning  the  stables  in  the  morning." 

The  federal  health  authorities  declared  that  manure  was  one  of  the 
most  fruitful  sources  of  danger  for  milk,  and  that  the  safest  way  to  avoid 
disease  germs  was  to  remove  the  manure  before  milking.  It  was  this 
extra  work  for  the  dairyman  to  which  the  association  of  "sanitary  milk 
dealers"  objected.  Another  suggestion  urged  by  this  association,  clients  of 
the  laboratory  which  bore  the  Commissioner's  name,  was  that  the  railroads 
transporting  milk  to  the  city  be  compelled  to  provide  "proper"  cooling  facili- 
ties for  the  milk  while  in  transit.  Their  petition  stated  that  as  a  result  of 
"improper"  cooling,  milk  was  received  in  the  city  at  a  higher  temperature 
than  allowed  by  the  requirements  of  the  Board  of  Health.  This  was  an  ad- 
mission that  milk  was  actually  being  dispensed  by  the  members  of  the  asso- 
ciation that  was  unsafe  to  drink  because  of  its  high  temperature.  There 
were  other  large  milk  dealers  who  were  not  members  of  the  association  who 
were  iceing  their  own  milk  en  route  in  order  to  live  up  to  the  health  re- 
quirements. 

The  rest  of  the  petition  submitted  to  the  Health  Commissioner  by  the 
association  created  in  his  own  laboratory,  had  to  do  entirely  with  pasteuriza- 
tion. The  first  request  to  advance  the  cause  of  pasteurization  was  to  remove 
the  prohibition  against  the  sale  of  pasteurized  milk  from  cans  in  stores. 
It  was  conceded  by  chemists,  physicians  and  bacteriologists  that  pasteurized 
milk  must  be  more  carefully  guarded  than  raw  milk,  because  disease  germs 
grew  more  rapidly  in  pasteurized  milk  from  which  the  good  germs  (which 
fight  the  harmful  ones  in  all  milk)  are  killed  ofif  by  the  process  of  heating. 

The  petition  also  requested  that  the  time  for  delivery  for  pasteurized 
milk  be  extended  from  24  to  48  hours  after  pasteurization.  This  request 
surprised  physicians  and  milk  dealers  in  general  who  were  not  members  of 
the  association,  because  it  was  officially  declared  at   a  hearing  before  the 

68 


State   Legislature   that   pasteurized  milk  after  48  hours   was   dangerous  to 

'"'"1^^U  S^'made  no  request  for  tke  ENFORCEMENT  of  a  single 
..f//r.^u/a'^ .  and  asked  only  for  concessions  to  LOOSEN  them  the  object 
bcinz  to  popularize  pasteurized  milk  even  to  the  point  of  selhng  it  from  cans 
\Tocery  stores.  Terms  were  invented  on  which  the  rmlk  dealers  were 
enabled  tl  charge  their  own  prices  for  bottled  mrlk  and  a  different  pnce 
was  axed  on  milk  that  was  "certiiiedr  " guaranteed;'  "inspected,     or     pas- 

^""xhough  these  various  designations  were  applied  to  the  milk,  >"  o^d" 
that  prices  ranging  from  seven  to  fourteen  cents  a  quart  might  be  obtained 

rom'the  consumers,  the  price  of  milk  to  the  '-r"' .^^iX.ZlrXZ 
cents  a  quart,  and  sometimes  only  two  cents.  The  price  at  the  dairy  was 
fixed  by  a  combination  of  milk  dealers  in  the  city  so  that  these  milkmen,  most 
of  whom  were  the  clients  of  the  laboratories  which  bore  the  Commissioners 
name  were  able  on  the  one  hand  to  dictate  how  much  the  dairyman  should 
rec^i;e  for  his  milk  and  also  how  much  the  public  should  pay.  The  profi  s 
of  the  milk  companies  were  enormous,  in  consequence.  The  milk  dealers 
explained  that  the  high  price  of  milk  to  the  public  was  due  to  a  shortage  in 
the  supply  and  the  shortage  in  the  supply  it  was  discovered,  through  a  cnm- 
nal  prosecution  against  the  milk  dealers,  was  due  to  the  fact  that  dairymen 
refused  to  supply  milk  at  the  low  price  which  the  milk  exchange  had  set^ 
They  were  turning  their  milk  into  cheese  and  their  cream  mto  butter,  and 
the  price  of  both  commodities  had  also  steadily  advanced. 

During  the  time  that  the  Commissioner  was  directing  the  work  of  the 
laboratories  and  acting  as  expert  chemist  for  the  various  wholesale  trades- 
men whose  business  so  vitally  affected  the  public  health,  his  agents  came  into 
frequent  conflict  with  the  employees  and  officials  of  the  Health  Department 
Among  those  engaged  in  the  laboratories  with  the  former  Commissioner 
were  former  employees  of  the  Health  Department.  At  the  head  of  the 
sanitary  division  in  the  Health  Department  was  an  official  who  himself  had 
been  elevated  to  that  office  by  the  former  Commissioner.  The  chief  sanitary 
officer  directed  the  work  of  enforcing  all  the  health  regulations,  and  it  was 
to  him  that  all  reports  were  made,  through  the  various  subsidiary  chiefs. 

An  illustration  of  how  lax  were  the  prosecutions  against  milk  dealers 
for  violations  of  the  sanitary  regulations  while  the  laboratories  represented 
the  "sanitary  milk  dealers,"  and  while  the  sanitary  superintendent  was  re- 
sponsible for  the  enforcement  of  health  regulations,  is  shown  by  /he  fact  that 
but  few  prosecutions  for  milk  adulteration  were  made  until  after  the  city  s 
official  investigating  body  called  attention  to  the  frequent  sale  of  impure 
milk.  Prosecutions  by  the  Health  Department  then  increased  seventy-five 
per  cent.,  according  to  court  records.  ,    ,      .    .    , 

A  business  firm  from  another  city  which  had  originated  the  industry  m 
broken  eggs  and  which  had  a  branch  office  in  the  city,  was  banished  from 
the  city  because  it  was  selling  bad  eggs  for  food.  These  bad  eggs  were  to  be 
sold  only  for  tanning  purposes.  This  firm  engaged  the  laboratories  as  expert 
chemists"  and,  following  such  employment,  instructions  were  issued  to  the 
food  division  of  the  Health  Department  that  the  eggs  of  the  firm  m  question 

69 


T 


\ 


^Ilil 


should  not  be  analyzed.  Whereupon  the  firm  wrote  to  the  sanitary  superin- 
tendent asking  permission  to  buy  "spot"  eggs  in  the  city  for  a  company 
located  in  another  city  which  was  only  a  subsidiary  of  the  firm  in  question. 
It  was  claimed  that  the  purchases  were  made  and  that  the  eggs  were  to  be 
used  for  tanning  purposes  only.  Permission  was  granted  and  it  was  pointed 
out  as  an  indication  of  the  friendliness  of  the  sanitary  superintendent  with 
this  particular  egg  dealing  concern,  that  the  sanitary  superintendent  had 
exceeded  his  authority  in  granting  the  request,  which  could  only  be  granted 
by  the  Board  of  Health,  of  which  he  was  not  a  member.  No  sooner  was  the 
permit  granted  than  the  firm  which  received  it  had  it  photographed  and  sent 
broadcast  to  egg  shippers  throughout  the  country,  so  that  shippers  would 
send  their  "spot"  eggs  to  the  firm  which  had  the  only  permit  issued  by  the 
Health  Department. 

A  week  prior  to  the  issuance  of  this  permit  a  demonstration  of  egg- 
breaking  was  arranged  by  the  firm  in  the  laboratories  of  the  former  Com- 
missioner, which  it  then  employed.  It  is  attested  that  when  the  Chief  of  the 
Food  Division  of  the  Health  Department,  who  was  present,  was  asked  what 
he  would  do  if  such  "spot"  eggs  were  sold,  he  replied  that  he  would  arrest 
the  seller.  Whereupon  the  former  Commissioner,  who  was  then  "expert 
chemist"  for  the  egg  dealer,  replied  that  his  own  ideas  upon  the  subject  had 
undergone  a  material  change  since  he  was  formerly  in  office.  The  ob- 
jection to  the  public  sale  of  the  eggs  by  the  chief  chemist  of  the  Health 
Department,  who  agreed  with  the  head  of  the  Food  Division,  was  overcome 
by  the  permission  granted  to  the  firm  a  week  later  by  the  sanitary  superin- 
tendent. Subsequently,  when  egg  dealers  were  arrested  by  Health  Depart- 
ment inspectors  for  selling  bad  eggs,  representatives  of  the  laboratories  that 
bore  the  name  of  the  former  and  subsequent  Commissioner,  appeared  for  the 
offenders  with  certificates  from  the  laboratoroes  that  declared  the  eggs  were 
not  bad. 

In  this  way  many  of  those  who  offended  against  the  public  health  by  the 
sale  of  bad  eggs  were  safe  from  prosecution  by  the  timely  service  of  the 
laboratory.     One  such  arrest  which  occurred  a  few  years  ago  is  typical  of  all 
others.     A  baker  who  was  using  a  can  of  bad  eggs  with  which  he  was 
"painting"  loaves  of  bread  for  the  purpose  of  providing  a  gloss,  was  arrested 
by  a  health  inspector  and  arraigned  before  a  magistrate.     The  prisoner  was 
held  for  trial  in  a  higher  court,  after  he  pleaded  guilty.     He  later  withdrew 
his  plea  and,  after  the  case  was  adjourned  twice,  he  finally  came  up  for  trial. 
A  chemist  from  the  former  Commissioner's  laboratory  appeared  on  behalf 
of  the  defendant  who  had  purchased  his  eggs  from  the  firm  which  was  the 
laboratory's  client,  and  which  held  the  only  permit  from  the  Health  Depart- 
ment previously  referred  to.     The  defendant  was  also  represented  by  the  egg 
firm's  lawyers.     In  court  the   lawyers  produced   samples   of  cake  made   of 
fresh  eggs,  which  they  claimed  were  from  the  same  grade  of  eggs  used  by 
the  defendant.     The  claim  was  so  strongly  urged  and  so  well  corroborated  by 
the    laboratory's    chemist   that,    in    spite   of   the    refutation   of   the    Health 
Department's  inspector,  the  charges  against  the  prisoner  were  dismissed  and 
he  was  allowed  to  go  free.    The  trial  of  this  baker  occurred  after  the  head 

70 


of  the  laboratories  had  been  reappointed  Health  Commissioner,  though  his 
arrest  occurred  three  months  before  the  appointment  was  made. 

The  laboratories  also  figure  as  active  in  the  defense  of  health  offenders 
after  the  Commissioner's  reappointment,  when  a  number  of  lard  dealers  had 
been  arrested  charged  with  adulterating  lard  with  cotton  seed  oil.  Ihe 
offenders  were  released  from  custody  by  the  Health  Commissioner  before 
whom  the  charges  were  pressed  by  the  Health  Inspectors.  The  laboratories 
were  also  of  service  to  a  group  of  candy  manufacturers  who  had  been  arrested 
charged  with  adulterating  candy  with  sulphurous  acids.  There  were  29 
candy  dealers  taken  into  custody,  and  they  were  fined  by  the  court.  They 
appealed  from  the  conviction  and  the  appeal  was  denied  by  the  higher  court. 
In  spite  of  this  denial  many  of  the  candy  dealers  arrested  afterward  were 
dismissed  from  custody  by  the  sanitary  superintendent.  They  were  clients 
of  the  former  Commissioner's  laboratory. 

The  use  of  sulphurous  acids  in  meats  to  preserve  their  healthy  appear- 
ance which  is  considered  a  serious  offense  against  the  health  of  the  people 
in  other  cities,  was  ignored  by  the  Health  Department  after  the  reappointment 
of  the  former  Commissioner.  Butchers  who  had  been  arrested  for  such 
offenses  were  released  from  custody  without  prosecution. 

In  more  ways  than  those  cited,  the  Health  Department  was  used  for 
the  injury  of  the  City's  health  rather  than  for  its  protection  by  those  who 
sought  commercial  profit.  The  "rot"  and  "spot"  eggs  mentioned  above  were 
used  in  scores  of  bakeries  in  the  city,  and  the  extent  of  the  practice  was  not 
fully  revealed  until  a  secret  investigation  was  made  by  the  city's  official  in- 
vestigating body.  The  investigation  disclosed  that  their  use  was  general  and 
that  most  of  these  eggs  were  originally  purchased  in  the  city,  shipped  to  an- 
other city,  and  reshipped  to  the  city  where  they  were  sold  to  bakers.  They 
were  supposed  to  be  used  for  "tanning"  purposes  only. 

It  was  also  shown  that  under  the  Commissioner  who  had  been  reappointed 
after  ten  years  of  private  practice  as  an  "expert  chemist,"  bob  veal  and 
horse  meat  were  sold  in  the  city  in  violation  of  the  law,  that  foodstuffs  of 
all  sorts  were  adulterated,  that  ice  cream  was  sold  far  below  the  standard  of 
nutrition  required  by  the  federal  health  authorities,  that  chicken  slaughter 
houses  continued  to  violate  the  law,  that  decayed  fruit  and  vegetables  were 
sold  throughout  the  city,  in  spite  of  the  vigilance  or  because  of  the  lack  of 
vigilance  of  the  health  inspectors,  and  that  the  public  health  was  menaced  as 
much  under  the  new  commissioner  as  at  any  previous  time.  The  report  of 
the  city's  official  investigating  body  more  than  a  year  after  the  Health  Com- 
missioner was  reappointed  to  office,  shows  how  flagrant  was  the  sale  of 
improper  meats  throughout  the  city.  This  investigating  body  engaged  the 
services  of  a  specialist  in  meats  employed  by  the  federal  government,  and 
discovered  in  half  a  dozen  days  that  thousands  of  pounds  of  meat  and  poultry 
unfit  for  human  consumption  were  offered  for  sale  in  various  parts  of  the 
city.  They  discovered  7,000  pounds  of  sausages,  pork,  lamb,  veal,  pouhry 
and  beef  which  they  condemned  in  sixty  different  places. 

In  one  of  the  city's  slaughter  houses  they  found  carcasses  of  cows  which 
showed  that  the  cattle  were  unmistakably  in  an  advanced  stage  of  tubercu- 
losis before  they  were  killed.     These  diseased  carcasses  were  discovered  in  a 

71 


m 


111 


i 


11 1 


'l! 


ii- ' 


$'■! 


slaughter  house  where  the  only  inspection  was  by  the  city's  Health  authorities. 
No  federal  inspection  was  extended  to  this  place,  because  the  slaughter 
house  supplied  meat  only  for  local  consumption;  and  the  local  inspector 
assigned  to  this  slaughter  house,  it  was  found,  had  no  qualification  whatever 
for  the  detection  of  diseases  in  animals.  It  was  also  found  by  this  special 
investigation  that  another  inspector  was  76  years  of  age,  and  that  he  was 
too  infirm  to  detect  or  arrest  provision  dealers  who  sold  improper  foods.  The 
investigators  found  that  one  poultry  dealer  in  the  city's  market  offered  325 
pounds  of  chicken  for  sale  at  two  cents  a  pound,  and  that  the  poultry  was 
so  putrid  that  it  offended  the  nostrils.  Yet  the  aged  inspector  of  the  Health 
Department  failed  to  either  arrest  the  poultry  dealer  or  to  report  the  cir- 
cumstances of  his  offer  to  his  superiors.  This  unsatisfactory  condition  of 
affairs  was  also  discovered  in  the  fish  market  and  in  the  slaughter  house 
division. 

In  spite  of  all  this  inefficiency  in  the  Health  Department,  there  was 
scarcely  a  limit  placed  on  expenditures  to  provide  for  the  comfort  and  con- 
venience of  the  city's  employees  in  the  department.  The  Commissioner,  who 
received  $7,500  a  year,  was  supplied  with  an  automobile,  a  chauffeur,  two 
horses  and  a  carriage  for  his  convenience.  Twelve  automobiles  were  pro- 
vided for  the  heads  of  different  inspection  divisions,  and  the  sanitary  super- 
intendent himself  was  supplied  with  a  smart,  sharp-cut  automobile,  which 
he  used  like  the  rest  largely  for  pleasure  purposes.  His  machine  was  painted 
a  light  brown,  and,  instead  of  having  the  initials  of  the  Department  con- 
spicuous, the  letters  were  scarcely  two  inches  long  and  were  concealed  froii] 
public  view  on  the  back  of  the  automobile.  The  total  cost  of  the  operation 
of  these  automobiles  was  $20,000  each  year,  and  their  repair  and  maintenance 
cost  half  as  much  again. 

An  investigation  by  the  city's  chief  investigating  body  shows  that  the 
main  purpose  for  which  the  automobile  was  used  by  the  Commissioner  him- 
self was  to  convey  him  to  and  from  his  home  and  office.  This  was  the  main 
use  to  which  the  cars  of  other  officials  of  the  Health  Department  were  put. 
Other  cars  were  used  more  for  pleasure  than  for  business,  and  the  records 
of  the  garage  where  the  automobiles  were  stored  show  that  the  automobiles 
are  in  use  almost  constantly  outside  of  business  hours. 

In  connection  with  the  reappointment  of  the  Health  Commissioner  it  is 
interesting  to  learn  a  few  of  the  circumstances  preceding  and  following  his 
selection.  Before  his  appointment  went  into  effect,  some  weeks  after  his 
predecessor's  term  of  office  expired,  there  had  been  negotiations  between  the 
city  and  private  interests  for  the  re-letting  of  a  contract  for  five  years  for 
the  removal  of  offal  (dead  horses  and  other  animals)  from  the  city's  streets. 
Under  the  old  contract  the  city  paid  $50,000  each  year  for  the  execution  of 
this  contract,  the  term  of  which  expired  with  that  of  the  previous  commis- 
sioner. Before  the  contract  was  re-let,  a  subsidiary  of  the  beef  trust  offered 
to  execute  the  same  contract  for  five  years  for  the  same  figure.  The  company 
had  no  plant  except  one  whose  operation  for  the  purposes  of  the  contract 
were  prohibited  by  the  rules  of  the  Health  Department,  because  the  plant 
was  too  close  to  population. 

The  bids  of  the  other  companies  who  had  plants  that  were   suitably 

72 


located,  were  less  than  that  of  the  first  company.  In  other  large  cities  where 
the  supply  of  offal  was  not  as  large  as  in  this  city,  the  companies  that  ob- 
tained the  contract  were  obliged  to  buy  the  privilege.  This  fact  was  known 
to  the  new  Commissioner,  but  in  spite  of  this  and  in  spite  of  the  fact  that 
the  old  companies,  whose  plants  were  properly  located,  offered  to  do  the 
work  for  many  thousands  of  dollars  under  the  price  submitted  by  the  beef 
trust  subsidiary,  the  latter  company   obtained   the   contract  at  the  higher 

figure. 

It  then  developed  that  this  successful  competitor  had  formerly  been  a 
client  of  the  laboratories  which  bore  the  Commissioner's  name  and  in  which 
he  was  active  for  so  many  years,  and  it  also  became  known  that  certain  large 
political  interests  were  favorable  to  the  new  company. 

There  were  other  items  affecting  the  public  health  and  the  public  pocket- 
book  that  were  plainly  neglected  by  the  Health  Department,  under  the  new 
Commissioner.  Bad  oysters  were  sold  throughout  the  city,  bakeries  were 
conducted  in  grossly  unsanitary  condition,  large  meat  slaughter  houses  con- 
tinued to  violate  the  sanitary  code  and  the  filth  in  the  chicken  slaughter 
houses  was  unchecked  All  these  conditions  were  disclosed  through  officii 
and  formal  investigation.  The  city's  investigating  commissioner  revealed 
the  scandalous  truth  about  the  filthy  bakeries,  and  newspaper  disclosure 
showed  the  unhealthy  state  of  the  oyster  beds.  It  was  common  rumor  (after- 
ward proven)  that  proprietors  of  chicken  slaughter  houses  paid  various  sums 
for  their  permits  from  the  Health  Department,  and  a  formal  report  made  by 
a  quasi-official  investigating  body  showed  the  unsanitary  conditions  in  the 
meat  slaughter  houses. 

A  great  boast  was  made  in  the  public  print  by  the  Health  Department 
about  the  saving  of  the  babies'  lives  through  a  purified  milk.  In  most  in- 
stances this  boast  was  only  a  sham,  and  the  savings  that  were  alleged  were 
largely  imaginative.  The  claims  however,  had  the  effect  of  extracting 
larger  funds  out  of  the  city  treasury  to  be  spent  by  the  Health  Department 
Qnd  of  exciting  a  few  tender  women  to  further  milk  charities.  Each  boast^ 
resulted  in  an  additional  appropriation  by  the  city  to  "save  the  babies*  lives" 

There  was  larger  waste  of  public  money  in  the  purchase  of  drugs  and 
other  supplies  by  the  Health  Department,  and  there  was  a  great  deal  of 
additional  waste  in  the  conduct  of  a  public  sanitarium  by  the  Health  Depart- 
ment outside  of  the  city.  The  city  at  one  time  appropriated  $200,000  for 
the  improvement  of  this  sanitarium,  but  the  visible  benefits  of  this  expendi- 
ture were  few. 

An  investigation  of  conditions  in  the  up-State  sanitarium  showed  that 
of  the  thirteen  hundred  acres  of  land  owned  by  the  city,  consisting  of  thirteen 
farms,  six  of  the  farms  were  used  primarily  for  private  purposes,  and  of 
the  five  hundred  persons  admitted  to  the  retreat  two  hundred  were  paid 
employees  of  the  city.  This  left  but  three  hundred  patients  to  be  cared  for 
by  the  physicians  and  attendants,  whose  annual  salaries  aggregated  more 
than  $200,000.  There  was  room  for  thousands  of  patients  in  this  expansive 
retreat,  with  its  broad  acres  of  fertile  farm  land.  Crops  sufficient  to  supply 
all  the  city's  charitable  institutions  could  be  raised  on  this  acreage,  but  nothing 
of  the  sort  was  done,  and  the  city  paid  thousands  and  hundreds  of  thousands 

73 


I 


I 


I 


of  dollars  for  fruits  and  vegetables  that  might  have  been  supplied  from  this 
institution.  Automobiles  and  carriages  were  at  the  service  of  most  of  those 
in  the  city's  employ  in  this  institution,  and  the  waiting  list  of  patients  anxious 
to  be  admitted,  numbered  thousands. 

The  year  before  the  city's  collapse  the  Health  Department,  which  had 
been  provided  with  $3,200,000  for  ordinary  expenditures,  requested  an  extra 
appropriation  of  $2,630,000  for  improvements  and  additions  to  the  institutions 
under  the  jurisdiction  of  the  Health  Department.  The  Health  Commissioner 
requested  an  appropriation  of  $105,000,  which  was  to  be  spent  for  ''enlarging 
and  improving"  the  up-State  sanitarium. 

The  Commissioner  wanted  to  purchase  additional  farm  land  for  $20,000 
for  which  there  could  be  no  immediate  or  remote  use. 

Large  sums  of  money  were  wasted  by  the  Health  Department  in  salaries 
for  needless  employees,  appointed  mainly  for  political  purposes.  The  payroll 
was  filled  with  the  names  of  employees  recommended  by  politicians.  These 
political  pensioners  were  designated  as  inspectors,  clerks,  nurses,  and  under 
other  titles,  but  their  employment  served  no  health  purpose.  They  were  use- 
less in  the  Department  and  their  names  only  swelled  the  city's  salary 
accounts. 

The  Health  Department  was  frequently  used  by  powerful  politicians  for 
their  own  selfish  ends,  and  one  of  the  most  conspicuous  instances  of  this 
usage  was  when  the  Health  Department  was  used  to  compel  a  business  trans- 
action with  the  overhead  city  railway.  The  Mayor  and  Health  Commis- 
sioner were  ordered  to  compel  the  railway  to  remove  its  structure  from  one 
of  the  city  parks  over  which  it  ran.  This  demand  was  withdrawn  after  the 
politician's  terms  were  met  by  the  railroad  company. 

Another  illustration  of  the  use  of  the  Health  Department  for  personal 
and  private  ends  was  the  compulsory  use  of  "sanitary"  drinking  cups  in 
public  places  throughout  the  city.  A  regulation  was  adopted  by  the  Health 
Department  ordering  the  removal  of  the  common  drinking  cup  in  public 
places  on  the  pretext  that  disease  germs  in  these  common  cups  endangered  the 
health  of  the  general  public.  Individual  "sanitary"  paper  drinking  cups  were 
installed  in  public  offices  at  a  cost  of  thousands  of  dollars  to  the  city,  and  in 
city  theatres  and  in  other  public  places  at  a  direct  cost  of  extra  thousands 
of  dollars  to  the  public. 

All  this  health  hypocrisy  was  nurtured  by  the  city's  health  authorities 
for  many  years,  and  the  conclusion  did  not  come  until  the  city  became  finan- 
cially insolvent.     The  insolvency  was  hygienic  as  well  as  financial. 

A  short  time  before  the  city's  collapse  the  Health  Commissioner  acknowl- 
edged that  when  he  re-entered  the  Health  Department  he  assigned  his 
$18,000  stock  in  the  laboratories  which  bore  his  name,  to  his  brother-in-law 
who  was  not  known  to  be  a  man  of  financial  means.  He  also  acknowledged 
that  for  "love  and  affection"  he  transferred  his  stock  holdings  in  an  anti- 
toxin company,  whose  operations  were  subject  to  control  by  the  Health  De- 
partment, to  his  beloved  wife. 

Such  was  the  history  of  the  city's  Health  Department.  It  was  on  a  par 
with  that  of  other  city  departments,  except  perhaps  that  it  affected  the  public 
in  a  more  vital  manner. 

74 


\  ' 


CHAPTER  X 

FIVE  MILLION  DOLLARS  A  YEAR  THE  EXTORTIONATE 

COST  OF  CITY  LIGHTING 

At  the  time  of  the  city's  collapse,  its  annual  lighting  bill  was  five  million 
dollars.  This  sum  of  money  was  paid  each  year  to  the  consolidated  group 
of  lighting  companies  who  charged  the  city  extortionately  for  both  gas  and 
electric  light.  Under  the  contract  between  the  city  and  the  electric  light 
company,  the  latter  was  receiving  $90  and  $146  for  450  watt  hours  of  current 
which  were  sold  to  other  cities  by  other  companies  for  $60  and  $70.  Ihe 
claim  of  the  electric  light  company  was  that  in  order  to  carry  out  the  terms 
of  the  city's  contract,  it  was  necessary  to  supply  700  watts  at  the  lamp. 
It  charged  the  city  for  this  EXCESS  current  over  the  contract  requirement. 

The  city  also  had  at  the  time  of  its  failure,  isolated  electric  plants  in 
various  public  buildings  which  cost  approximately  a  million  dollars.  The 
use  of  these  plants  was  restricted  by  those  officials  responsible  for  the  city  s 
lighting,  who  declared  that  electric  current  could  be  purchased  cheaper 
from  the  lighting  trust  than  it  could  be  manufactured  by  the  city.  This 
claim  was  based  on  "tests"  made  in  the  city's  own  lighting  plants,  one  of 
them  being  in  the  new  building  occupied  by  the  Police  Department.  For 
several  years  the  plant  in  this  building,  which  cost  $90,000,  remained  unused, 
because  of  the  desire  of  certain  public  officials  to  favor  the  lighting  trust 
at  the  expense  of  the  city. 

During  the  "test,"  which  was  made  at  this  plant  under  the  direction  of 
engineers  from  the  electric  lighting  combination,  four  city  engineers  and 
four  firemen  were  employed  at  the  plant.  The  test  was  made  at  a  time 
when  little  heat  was  required  in  the  building,  so  that  the  full  cost  of  oper- 
ating the  plant  was  charged  to  electric  illumination.  The  cost  of  heating 
greatly  exceeds  that  of  lighting  in  large  buildings,  because  nine-tenths  of 
the  steam  produced  from  the  coal  is  used  for  heating  purposes  and  only  one- 
tenth  for  lighting.  The  "test,"  therefore,  "vindicated"  those  officials  who 
were  responsible  for  the  excessive  toll  of  the  lighting  trust  for  power  and 
illumination  supplied  to  the  city's  police  headquarters.  While  the  electric 
plant  remained  idle,  the  city  was  charged  with  the  salaries  of  three  en- 
gineers and  four  firemen  supposedly  employed  at  the  plant.  During  all 
this  time,  the  city  was  paying  interest  on  $90,000,  the  cost  of  its  construction, 
and  7>4  cents  per  kilowatt  for  illuminating  current  and  six  cents  for 
illuminating  power.  The  current  and  the  power  could  have  been  generated 
by  the  city's  own  plant  at  a  cost  not  exceeding  three  cents  per  kilowatt  hour. 
A  more  striking  illustration  of  the  waste  of  public  funds  for  the  benefit 
of  the  electric  lighting  combination  is  the  sum  paid  for  electric  current  for 

75 


-^1 


lighting  and  heating  the  city's  hospitals.  The  city  was  constructing  at  the 
time  of  its  failure  a  new  consolidated  hospital  at  a  cost  of  $12,000,000. 
An  electric  plant  costing  $500,000  was  installed  on  the  hospital  grounds.  The 
city  was  paying  yY^  cents  per  kilowatt  hour  for  current  in  the  old  hospital 
which  was  being  replaced,  and  it  was  paying  six  cents  per  kilowatt  hour  for 
electric  power.  The  city  had  an  electric  plant  in  the  old  hospital,  which  was 
used  only  at  minimum  capacity.  It  cost  $100,000  to  construct,  but,  instead 
of  generating  current  for  light,  heat  and  power  in  the  building,  it  was  used 
only  for  auxiliary  purposes. 

The  current  for  the  old  hospital  was  still  purchased  at  the  figures  quoted 
at  the  time  of  the  city's  failure.  The  electric  plant  in  the  old  hospital  \yas 
used  only  to  supply  steam  heat  for  kitchen  and  laundry  and  for  pumping 
water  to  various  parts  of  the  building.  The  city  might  have  saved  $6,000 
a  year  if  the  current  from  this  plant  had  been  used  to  manufacture  ice  in 
the  building,  which  was  purchased  at  that  price  annually.  The  extravagance 
for  lighting  and  heating  did  not  end  with  the  old  hospital  and  with  the 
expenditure  of  a  half  million  dollars  for  electric  plant  in  the  new  hospital. 
Instead  of  paying  y/2  cents  a  kilowatt  hour  under  the  terms  of  the  contract 
for  the  new  hospital,  the  city  was  actually  paying  7J/2  and  6  cents  per  kilo- 
watt hour  for  power  in  the  new  building.  The  contract  for  3^^  cents  was 
avoided  by  the  transmission  of  electric  current  to  the  new  building  through 
the  meters  of  the  old  building,  where  the  contract  rate  was  7^  cents  and  6 
cents  per  hour  for  illumination  and  power  respectively. 

The  city  paid  these  extortionate  prices  for  lighting  and  heating  in  the 
new  hospital  in  spite  of  the  fact  that  its  own  electric  plant,  constructed  at  a 
cost  of  half  a  million  dollars,  was  finished  and  ready  for  use.  The  cost  of 
operating  the  engine  room  and  boiler  in  the  new  hospital  was  $80,000  a  year, 
of  which  $40,000  was  spent  for  fuel.  Its  expensive  machinery  was  depre- 
ciating in  value  as  a  result  of  its  deliberate  disuse.  The  plant  was  suMcient 
to  supply  electric  current  for  a  population  of  one  hundred  thousand.  The 
plant  could  generate  suMcient  current  for  all  the  public  buildings  in  the  city 
and  save  at  least  one-quarter  of  the  Hve  million  dollars  contributed  annually 
to  the  lighting  trust. 

Another  illustration  of  how  the  electric  trust  was  favored  at  the  expense 
of  the  city  by  the  city's  own  officials,  was  in  the  case  of  the  Record  Building, 
erected  at  a  cost  of  ten  million  dollars.  In  this  building,  whose  scandalous 
jobbery  was  told  in  an  earlier  chapter,  the  city  had  an  electric  plant  which 
cost  $60,000.  This  plant  could  generate  600  kilowatts.  Several  years  before 
the  city's  collapse  it  was  learned  by  those  outside  of  public  office  that  the  plant 
was  used  to  only  one-quarter  of  its  capacity.  The  Record  building  was 
within  a  few  hundred  feet  of  the  City  Hall,  and  was  surrounded  by  other 
public  buildings,  which  were  supplies  with  current  and  power  by  the  lighting 
trust.  The  cost  of  this  service  was  four  times  the  cost  of  the  current  manu- 
factured by  the  city's  own  plant,  a  few  hundred  feet  away,  in  the  basement  of 
the  Record  Building. 

Following  this  discovery  a  faithful  city  engineer  proposed  that  the  extra 
current  that  could  be  generated  from  the  plant  in  the  Record  Building  be 
extended  to  the  surrounding  public  buildings  and  to  the  City  Hall  itself. 
He  also  proposed  to  supply  heat  and  power  to  the  court  houses  across  the 

76 


street.  This  plan  was  simple  and  its  execution  would  have  entailed  but 
slight  expense.  It  would  have  saved  the  city  many  thousands  of  dollars 
each  year.  It  was  rejected,  however,  by  the  officials  of  the  Water  Depart- 
ment, who  had  partial  supervision  over  the  electric  supply  of  the  city.  It 
was  claimed  by  these  officials  that  current  could  be  obtained  from  the  lighting 
trust  at  as  cheap  a  rate  as  the  city  could  manufacture  it.  The  cost  of  manu- 
facture in  this  building  was  approximately  i^  cents  per  kilowatt  hour. 

The  expert  wisdom  and  judgment  of  the  Water  Department  also  pro- 
duced a  handsome  profit  for  the  lighting  trust  for  many  years  prior  to  the 
city's  failure,  from  the  purchase  of  illuminating  current  and  power  for  one 
of  the  city's  large  museums  and  for  one  of  its  hospitals  in  the  upper  district. 
The  city  had  its  own  electrical  plant  in  both  institutions,  and  when  the  point 
was  raised  that  the  current  could  be  manufactured  by  the  city  cheaper  than 
was  charged  by  the  lighting  trust,  the  officials  of  the  Department  proposed 
that  a  "test"  be  made.  The  "test"  was  under  their  direction,  and,  according 
to  their  figures,  it  showed  that  the  cost  of  generating  electric  current  and 
power  in  the  hospital  building  was  eight  cents  a  kilowatt  hour  and  that  the 
result  in  the  museum  building  was  fourteen  cents  per  kilowatt  hour.  The 
Water  Department  officials  who  made  the  "test"  announced  that  the  cost  of 
electric  current  for  illuminating  purposes  in  the  hospital  building,  from  the 
city's  own  plant,  was  $24,000  a  year.  The  actual  cost  of  the  power  and 
current  developed  by  the  plant  for  one  year  subsequent  to  this  official  test 
was  $23,000,  and  this  included  the  use  of  the  plant  not  only  for  illuminating 
purposes  but  for  heating  the  building  and  operating  the  electric  elevators, 
for  ventilating,— laundry  and  kitchen  use,  and  for  the  manufacture  of  ice. 

A  like  refutation  was  given  to  the  figures  supplied  by  the  city  officials, 
whose  "test"  showed  that  the  city's  museum  could  be  supplied  with  electric 
light  and  power  cheaper  by  the  electrical  trust.  The  "test"  made  by  the 
officials  showed  that  the  cost  of  current  in  the  museum  from  the  city's  own 
electric  plant  was  fourteen  cents  per  kilowatt  hour.  The  subsequent  test 
made  by  a  group  of  electrical  engineers  employed  by  a  civic  organization 
showed  that  the  power  was  not  fourteen  cents  per  kilowatt  hour,  but  four  and 
three-tenths  cents,  including  interest  on  the  money  invested  in  the  plant 
Another  test  made  by  the  National  Association  of  Stationary  Engineers 
showed  the  actual  cost  per  kilowatt  hour  to  be  2.69  cents.  It  might  be  added 
that  the  first  "test"  made  on  the  plant  in  the  city's  museum  showed  that  the 
cost  per  kilowatt  hour  for  generating  current  was  29  cents.  This  sum  was 
reduced  by  the  same  officials  after  a  second  "test,"  lasting  one  year. 

To  offset  the  seriousness  of  the  agitation  for  the  extension  of  the  city's 
own  electric  system,  the  lighting  trust  offered  to  supply  the  city  with  current 
at  the  same  rate  that  it  charged  private  consumers.  This  offer  was  extra- 
ordinary, since  favored  consumers,  it  was  learned,  were  supplied  with  electric 
current  at  as  low  a  rate  as  1.89  cents  per  kilowatt  hour.  This  low  rate  was 
extended  only  where  electric  current  could  have  been  manufactured  under 
that  price  by  private  consumers.  The  offer  to  reduce  the  rate  to  the  city 
was  announced  with  a  flourish  by  the  officials  of  the  Water  Department,  as 
well  as  by  the  agents  of  the  trust  itself,  but  when  analyzed  it  was  found  that, 
instead  of  giving  the  city  the  current  at  the  low  rate  of  one  and  a  half  cent 
per  kilowatt  hour,  the  company's  concessions  were  made  only  on  a  graduated 

77 


\ 


schedule;  that  is,  the  contract  price  was  reduced  from  7>^  cents  to  5  cents 
and  3  cents,  provided  a  certain  quantity  of  electric  current  was  used.  The 
contract  provided  that  where  less  than  100,000  kilowatt  hour  of  current  were 
used  the  rate  would  be  7^  cents,  and  that  where  more  than  100,000  and  less 
than  200,000  kilowatt  hour  were  used,  the  rate  would  be  4  cents.  The  final 
reduction  to  3  cents  was  made  where  more  than  200,000  kilowatt  hours  were 
used.  Under  the  contract,  no  reduction  was  made  to  the  city  where  less 
than  100,000  kilowatt  hour  current  was  used.  In  such  case  the  rate  was  73^ 
cents  for  illumination  and  6  cents  for  power.  The  concessions  of  the  com- 
pany were  noisily  announced,  but  the  city  gained  little  advantage  over  its 
previous  contract.  The  city  at  all  times  paid  considerably  more  for  current 
from  the  electric  trust  than  did  private  consumers  who  threatened  to  generate 
their  own  current. 

In  order  to  equalize  its  profits  and  to  make  up  for  losses  suffered  by  con- 
cessions to  large  competitors,  the  electric  trust  extorted  an  excessive  rate  for 
its  current  from  small  private  consumers.  Trades  people  in  various  parts 
of  the  city,  as  well  as  householders,  were  compelled  to  pay  ten  cents  per 
kilowatt  hour.  Protests  against  this  overcharge  were  made,  and  expert  en- 
gineers proved  at  public  hearings  that  the  electric  trust  was  favoring  large 
consumers  with  heavy  rebates;  in  fact  was  supplying  them  with  current 
below  cost,  to  stifle  individual  competition.  They  also  showed  that  the  rate 
to  small  consumers  was  excessive,  and  that,  in  spite  of  unfair  concessions 
made  to  these  large  consumers,  the  profits  of  the  electric  trust  were  annually 
more  than  eleven  million  dollars,  which  was  six  per  cent,  on  the  actual  in- 
vested capital  in  the  company,  plus  seven  per  cent,  on  $71,000,000  of  so-called 
franchise  value. 

This  franchise  value  cost  the  electric  trust  or  those  who  owned  and 
controlled  it,  NOT  ONE  CENT.  The  franchises  for  the  various  constituent 
companies  in  the  combination  were  awarded  by  the  city,  and  at  the  time  of 
the  city's  collapse  it  was  charged  that  the  electric  trust  owed  the  city  about 
ten  million  dollars  as  the  city's  share  of  the  profits  from  the  operation  of  one 
of  the  trust's  subsidiaries.  A  few  years  before  the  city's  failure,  it  was  dis- 
covered that  this  subsidiary  company  on  whose  franchises  the  electric  monop- 
oly was  based  had  concealed  its  profits.  Under  the  terms  of  the  franchise, 
the  city  was  to  have  received  all  profits  above  ten  per  cent. ;  it  was  also  pro- 
vided in  the  contract  that  if  the  company  failed  to  carry  out  this  provision, 
that  the  city  should  forfeit  the  franchise.  It  was  known  for  many  years  that 
this  company's  earnings  were  largely  in  excess  of  ten  per  cent.,  but  it  was  not 
until  the  city's  financial  condition  became  precarious  that  an  attempt  was  made 
to  recover  these  sums.  Testimony  was  taken  before  a  referee,  and,  just 
before  the  city's  failure,  its  financial  officer  reported  that  the  city  had  been 
defrauded  out  of  at  least  $3,200,000  by  concealment  of  the  profits  by  the 
conduit  company.  This  sum  was  determined  on  SPECIFIC  items,  and  the 
city's  financial  officer  also  reported  that  the  company  was  indebted  to  the  city 
SEVERAL  MILLIONS  MORE,  but  that  no  determination  of  the  exact 
amount  could  be  reached,  because  of  the  company's  involved  method  of  book- 
keeping. 

The  city  paid  for  electric  and  gas  illumination  during  the  generation 
preceding  its  financial  failure,  while  the  lighting  companies  were  influential 

78 


in  electing  officials  to  public  office,  a  sum  in  excess  of  $60,000,000.  It  had 
spent,  as  already  stated,  more  than  one  million  dollars  for  electric  plants 
in  public  buildings,  and,  through  official  stupidity  or  misconduct,  the  city  was 
erecting  a  new  municipal  building  at  a  cost  of  $15,000,000,  without  installing 
its  own  electrical  equipment.  This  building  was  24  stories  high,  and  covered 
an  area  of  three  city  blocks. 

The  same  general  scheme  of  extortion  practised  by  the  lighting  trust  on 
the  city  was  carried  on  for  many  years  by  the  gas  monopoly.  The  city  was 
in  the  clutches  of  this  combination,  and  its  history,  written  in  the  records 
of  the  state  legislature  and  in  the  reports  of  other  official  bodies,  shows  how 
constantly  the  city  was  defrauded  and  how  systematically  the  people  were 
overcharged.  The  city  itself  provided  the  company  with  franchises  under 
which  it  was  enabled  to  pipe  its  gas  through  the  streets  and  supply  it  to  the 
people,  yet,  in  spite  of  this  liberality  on  the  city's  part,  the  city  was  over- 
charged on  the  price  of  gas. 

For  ten  years  the  people  paid  $1.25  a  thousand  cubic  feet  for  gas,  and 
for  many  years  previous  the  price  was  $2.50  per  thousand  cubic  feet.  This 
price  was  reduced  after  continuous  agitation.  When  the  price  was  at  $1.25 
per  thousand  cubic  feet  the  company  claimed  that  its  property  would  be 
confiscated  if  further  reduction  was  made.  It  showed  by  figures  that  the  cost 
of  manufacture  and  distribution  was  virtually  as  much  as  the  charge  itself 
per  thousand  cubic  feet.  The  public  demand  for  a  cheaper  gas,  however,  con- 
tinued and,  in  spite  of  the  cry  of  confiscation,  the  price  was  reduced  to  one 
dollar  a  thousand  cubic  feet.  The  gas  company  threatened  to  go  out  of  busi- 
ness. The  officers  pleaded  that  they  would  be  unable  to  continue  with  profit. 
It  was  at  this  point  that  a  determined  effort  was  made  to  determine  the  cost 
of  gas  production,  and  it  was  found,  after  exhaustive  inquiry  by  a  legislative 
committee,  that  the  actual  cost  of  manufacturing  and  distributing  gas  in  the 
city  was  42  cents  per  thousand  feet,  and  that  the  highest  cost  did  not  exceed 
52  cents.  The  committee,  after  months  of  deliberation,  concluded  that  the 
rate  for  gas  should  be  reduced  to  eighty  cents,  and  it  estimated  that  on  such 
rate  the  gas  company  could  make  a  liberal  profit  on  its  capital,  allowing  as 
much  as  fifty  million  dollars  for  the  good  will  and  franchise  rights  of  the 
various  companies  in  the  consolidation.  The  company  had  actually  inflated  its 
capital  by  $100,000,000,  and  its  cry  of  confiscation  was  based  on  the  fact  that 
it  would  be  unable  to  pay  dividends  on  this  inflated  sum. 

Instead  of  reducing  the  price  of  gas  to  eighty  cents  immediately,  as  direct- 
ed by  the  legislature,  the  gas  combination  contested  the  legality  of  the  legis- 
lative act.  Pending  this  test,  the  people  were  compelled  to  pay  the  dollar 
rate  per  thousand  cubic  feet,  and  when  the  highest  court  in  the  land  affirmed 
the  action  of  the  state  If^gislature,  the  company  had  in  its  coffers  more  than 
twelve  million  dollars  paid  to  it  by  consumers  in  excess  of  the  eighty-cent  rate. 
The  court  ordered  that  this  excess  be  returned  to  the  consumers  from  whom 
it  was  collected  pending  final  judicial  settlement,  but  so  difficult  was  this  task 
that  $2,000,000  remained  in  the  treasury  of  the  gas  company  because  of  the 
disappearance  of  rightful  claimants,  many  of  whom  had  died  or  forgotten 
about  their  claims  and  left  the  state,  while  many  others  were  denied  their 
rebates  because  they  were  unable  to  establish  their  claim.  The  cost  of  illumin- 
ating gas  in  other  communities  was  less  than  one-half  the  price  charged  to 

79 


\ 


■I 


i 


4 


the  people  of  the  Great  City,  and  in  spite  of  the  cry  of  confiscation  at  each 
formal  effort  made  to  reduce  the  price  of  gas,  the  gas  combination  was  in 
a  flourishing  condition  at  the  time  of  the  city's  failure. 

For  many  years  complaints  were  directed  to  the  city  officials  and  to  the 
gas  companies  that  the  quality  of  gas  was  below  standard  and  that  excess 
quantities  of  water  were  forced  into  the  gas  mains.  The  effect  of  such 
action,  if  true,  was  that  the  illuminating  quality  of  the  gas  was  weakened  and 
the  poisonous  element  in  the  gas  strengthened.  This  resulted  in  the  quicker 
consumption  of  gas  on  account  of  its  diminished  quantity  and  because  of  the 
increased  pressure  in  the  pipes.  Gas  bills  were  increased  in  consequence. 
Whatever  the  proof  of  these  charges  there  was  grim  evidence  year  after 
year  than  a  dangerous  quality  of  gas  was  supplied  to  the  people.  There  were 
numerous  cases  of  gas  asphyxiation  reported  each  winter  when  tenement 
windows  were  kept  shut  to  keep  out  the  wind  and  weather.  At  such  times, 
with  poor  ventilation,  many  poor  persons  were  found  dead  in  bed  after  the 
gas  light  had  died  out  and  poisonous  carbonic  oxide  filled  the  rooms.  Only 
watered  gas  could  have  produced  this  fatal  effect  when  it  escaped  from  the 
gas  jet  after  the  light  was  automatically  extinguished. 

The  history  of  the  gas  franchises  in  the  great  city  were  steeped  in  as 
much  scandal  and  public  deception  as  was  the  history  for  franchises  of  elec- 
tric lighting.  The  first  company  which  obtained  its  franchise  from  the  city, 
a  half  century  before,  was  obligated  to  reduce  the  cost  of  gas  illumination  to 
the  people  after  ten  per  cent,  profit  was  earned  on  the  franchise.  When  this 
profit  was  exceeded,  the  company  doubled  its  capital,  dividing  the  excess 
profit  among  its  original  stockholders.  By  this  means  the  reduction  in  the  price 
of  gas  was  postponed  for  many  years.  Under  the  terms  of  the  franchise,  a 
stipulation  was  made  that  this  company  could  not  combine  with  any  other 
company  without  forfeiture  of  its  charter.  This  proviso  was  circumvented 
when  a  holding  company  was  organized  to  take  over  several  of  the  inde- 
pendent gas  companies.  The  total  capitalization  of  the  individual  companies  in 
the  combination,  which  was  legalized  by  the  legislature,  was  $17,000,000.  This 
was  increased  to  $37,000,000  by  arbitrary  arrangement  among  the  companies 
themselves,  and  the  profits  from  the  sale  of  gas  to  the  people  of  the  city 
were  sufficient  to  pay  ample  dividends  on  this  inflated  capital. 

One  of  the  pretenses  on  which  the  combination  was  formed  was  that  the 
price  of  gas  would  be  reduced  as  a  result  of  economies  in  manufacture  and 
operation.  It  was  publicly  declared  that  consolidation  of  the  various  com- 
panies would  result  in  large  savings  from  administrative  expenses.  The  com- 
bination resulted  in  the  reduction  in  the  number  of  high-priced  gas  officials, 
but  this  was  accomplished  only  by  the  pensioning  of  those  who  were  com- 
pelled to  make  way  for  the  insiders  in  the  new  combination.  Instead  of  im- 
proving the  quality  of  gas,  it  was  deteriorated  and  the  better  grade  of  gas 
manufactured  by  some  of  the  constituent  companies  was  restricted  in  volume. 
The  agitation  for  cheaper  gas  followed  the  realization  that  the  consolidation 
of  the  gas  companies  brought  only  increased  profits  to  the  stockholders. 

For  ten  years  prior  to  the  city's  collapse  a  franchise  tax  had  been  levied 
by  the  state  legislature  on  all  public  service  corporations  operating  under  city 
franchises.  During  those  ten  years,  the  lighting  trust,  including  the  electric 
and  gas  combinations,  refused  to  pay  the  franchise  tax,  which  grew  each 

80 


year  by  a  million  dollars.  A  test  was  made  by  one  of  the  franchise-holding 
corporations,  which  resulted  in  a  final  court  adjudication  sustaining  the 
franchise  assessment  on  that  particular  company.  On  the  basis  of  that  final  de- 
cision, the  city  had  assessed  the  lighting  corporations  at  less  than  their  actual 
franchise  value.  These  assessments  should  have  been  increased  following  the 
decision  in  this  test  case,  but,  instead  of  increasing  the  assessment,  a  compro- 
mise was  accepted  on  the  basis  of  the  first  assessment.  The  final  settlement  of 
the  tax,  however,  was  not  made  until  the  city's  debt  with  the  lighting  trusts 
was  so  large  that  it  equalled  the  accumulated  amount  of  franchise  tax,  and  the 
city's  financial  officer  accepted  the  compromise  which  resulted  in  clearing  the 
company's  franchise  debt  on  the  basis  of  what  the  city  owed  the  lighting  com- 
panies, on  charges  which  were  grossly  excessive.  The  exorbitant  profits  of  the 
lighting  trust  only  hastened  the  city's  financial  end. 


II 


r 


■"i(fe 


I 


I 


I 


II 


81 


I,- 


K' 


92 


1} 


ill 


CHAPTER  XI 

PARK  DEPARTMENT  PRIVILEGES  AND  PROPERTY 
EXPLOITED  FOR  PRIVATE  GAIN 

The  story  of  the  city's  Park  Department  is  the  same  as  that  of  every 
other  branch  of  the  city  government.  The  people's  property  was  used  for 
private  purposes  and,  wherever  an  opportunity  presented  itself  for  private 
profit  at  the  city's  expense,  there  an  individual  was  found  draining  the  city's 
resources.  Park  privileges  were  a  fruitful  source  of  private  profit,  and 
more  than  one  person  of  political  prestige  lived  comfortably  and  well  from 

these  privileges.  . 

In  one  instance,  a  political  non-office-holder  derived  an  income  of 
$25,000  a  year  through  his  "control"  over  one  park  privilege;  this  was  the 
privilege  of  permitting  goats  to  transport  children  in  small  wagons  along 
the  city's  principal  boulevard  in  one  of  the  parks.  This  politician  died 
several  years  before  the  city's  collapse,  but  his  widow,  a  comely  young 
woman  who  survived  him  and  who  was  but  half  his  age,  inherited  a  fortune 
of  $200000.  The  political  non-office-holder  never  had  visible  means  of 
support, ' never  having  held  public  office;  but  his  wealth  grew  nevertheless, 
and  one  of  his  principal  sources  of  income  was  this  particular  Park  privilege. 
The  city,  of  course,  owned  the  park  and  it  also  owned  the  boulevard  along 
which  these  goat  wagons  meandered;  but  it  was  for  the  politician  to  say  who 
should  receive  the  privilege,  what  price  should  be  paid  to  the  city  for  it,  and 
how  much  he  himself  must  receive.  ^ 

There  were  more  profitable  privileges  farmed  out  by  politician  middle- 
men in  the  city's  parks.  There  were  restaurant  privileges,  boat  privileges 
and  privileges  of  diverse  description,  and  each  brought  a  profit— ftof  to  the 
city,  but  to  the  middleman  who  exploited  the  city's  property.  There  was  a 
concession  let  for  a  fashionable  restaurant  on  city  property  along  the  drive, 
and  for  years  the  privilege  was  held  by  an  astute  business  man.  At  the 
time  of  the  city's  collapse,  this  thrifty  merchant  had  acquired  the  possession 
of  a  parcel  of  property  close  to  the  Casino  which  he  conducted.  The  parcel 
was  worth  a  quarter  of  a  million  dollars.  He  had  also  acquired  an  interest 
in  a  fashionable  ten-story  apartment  house  overlooking  the  Casino  property. 
The  apartment  house  was  worth  at  least  another  quarter  of  a  million  dollars. 

When  it  came  to  balancing  the  city's  record  in  regard  to  this  particular 
concession,  it  was  found  that  not  only  was  the  rental  inadequate,  but  that 
at  the  end  of  a  stated  period  the  city  was  actually  in  the  debt  of  the  lessee, 
because  of  the  terms  of  the  contract  which  he  had  made  with  the  city  in 
the  beginning.  The  history  of  this  privilege  is  interesting.  The  city  owned 
the  Casino  building,  and  rented  it  for  one  year  for  $6,300.  The  lessee  was 
to  make  repairs  at  his  own  expense,  in  addition  to  this  rental.  The  lease 
was  renewed  for  ten  years  at  the  rate  of  $3,500  a  year,  but  after  a  few 

83 


years  a  new  lease  was  drawn  covering  a  similar  period  of  ten  years. 
The  rental  this  time  was  reduced  to  $2,400  a  year.  The  excuse  for  this 
reduction  was  that  the  lessee  had  spent  several  thousand  dollars  in  repair 
work  to  increase  the  convenience  of  his  patrons.  The  patronage  and  profits 
increased  while  the  city's  rent  declined  and  in  the  end  the  city  was  the  lessee's 
debtor.  The  fact  that  he  had  acquired  property  of  enormous  value  adjacent 
to  the  city's  own  Casino,  out  of  profits  on  the  city  lease,  was  not  taken  into 
account  when  the  balance  was  struck. 

There  were  other  privileges  let  on  the  same  unprofitable  terms  to  the 
city  There  was  an  inn  along  the  city's  subway  rented  at  five  per  cent,  of 
the  gross  income  for  a  period  of  ten  years.  So  far  as  the  city's  records 
are  concerned,  not  one  dollar  of  rent  had  been  received  at  the  expiration  of 
the  ten  years.  Under  another  contract  for  a  casino  in  the  park  in  the 
heart  of  the  city,  the  privilege  was  to  have  provided  a  revenue  of  $3,000  a 
year  for  ten  years.  Prior  to  this  lease,  the  rental  of  the  casino  was  $9,000  a 
year.  This  rental  was  arbitrarily  reduced  by  the  city's  own  responsible 
official.  Through  this  new  lease  the  city  was  deprived  of  $60,000,  while  the 
profits  of  the  casino  grew  through  increased  earnings.  The  new  lease  pro- 
vided also  that  the  lessee  should  receive  reductions  on  account  of  repairs  and 
insurance.  These  reductions  amounted  to  $4,000,  and  the  net  result  to  the 
city  of  the  ten-year  privilege  was  not  over  $26,000,  less  than  one-third  of 
what  the  city  might  have  earned  under  the  former  contract. 

Another  illustration  of  the  mismanagement  of  the  city's  parks,  in  so 
far  as  its  revenues  arc  concerned,  was  the  leasing  of  the  privilege  for 
carousels.  The  city  derived  $600  a  year  for  the  privilege  in  its  most 
important  park.  It  was  let  on  a  monthly  rental  of  ten  per  cent,  of  the  gross 
receipts,  and  the  lessee  never  reported  more  than  $6,000  a  year  income.  A 
similar  lease  in  another  city  park  produced  an  annual  revenue  of  $6,600. 
This  lease  was  let  at  public  auction,  and  the  difference  in  income  shows  to 
what  extent  the  city  was  the  loser  from  this  privilege  in  its  most  important 
park.     Needless  to  say,  the  privilege  was  let  without  comparative  biddmg. 

The  city  lost  hundreds  of  thousands  of  dollars  annually  through  the 
dishonesty  of  public  officials  responsible  for  these  park  privileges.  In  the 
same  park  where  the  political  non-office-holder  made  a  fortune  annually 
through  the  manipulation  of  one  important  privilege,  the  city's  loss  through 
similar  mismanagement  and  fraud  was  approximately  $200,000  a  year.  The 
boat  privilege  in  this  park  produced  a  revenue  for  ten  years,  under  lease, 
of  $1  750  per  year.  This  privilege  was  let  in  conjunction  with  the  carriage 
privilege  in  the  park,  and  together  the  city's  revenue  was  $2,250  a  year  for 
ten  years.  This  same  double  privilege  in  a  less  important  city  park  produced 
a  revenue  of  $7,700  a  year,  this  privilege  being  let  through  "public  adver- 
tising."  The  privilege  in  the  more  important  park  was  let  through  private 
arrangement. 

This  same  story  of  the  city's  financial  wrong  even  to  the  smallest  lease 
in  the  park  is  the  history  of  every  privilege  owned  by  the  city  and  rented 
through  responsible  park  officials.  The  city's  income,  instead  of  increasmg, 
was  continually  decreasing,  until  an  investigation  was  made  several  years 
before  the  city  became  bankrupt.     It  was  discovered  then,  by  a  comparison 

84 


of  rentals,  that  the  city's  decrease  in  four  years,  contrasted  with  a  similar 
period,  was  $78,000.  The  city's  income  should  have  increased  that  sum,  it 
not  more,  over  the  previous  period.  1      „*  ., 

The  city  leased  the  use  of  the  mineral  spring  m  one  of  its  parks  at  a 
rental   of  $500   a  year,   the   contract   period  being   for   ten   years     At   the 
expiration  of  that  time  the  city  not  only  received  no  rental  from  the  lessee 
hut  was  out  several  thousand  dollars  on  the  contract  the  lessee  having  claimed 
more  than  $5,000  for  repairs  to  the  building  owned  by  the  city. 

A  similar  story  of  the  city's  wrongs  through  its  park  leases  is  the  rental 
of  a  tavern  in  the  city's  most  important  park  for  a  term  of  five  years,  at 
five  per  cent,  of  the  gross  receipts.  The  lease  provided  that  the  lessee  would 
make  repairs  at  his  own  expense,  but,  notwithstanding  this  stipulation,  the 
licensee  was  permitted  to  deduct  $2,633  of  the  amount  of  his  rental  Vouchers 
for  only  a  portion  of  this  sum  was  submitted  to  the  city  for  consideration. 

It  would  be  tedious  to  review  the  destruction  of  the  city  s  financial 
interest  in  all  its  park  leases,  but  some  of  them,  of  course,  must  be  cited 
to  show  how  damaging  such  contracts  have  been.  The  income  from  park 
leases,  if  commensurate  with  their  value,  would  have  provided  a  considerab  e 
part  of  the  funds  needed  to  conduct  the  city's  affairs.  The  commensurate 
rental  would  have  exceeded  half  a  million  dollars  a  year,  the  difference 
between  what  the  city  actually  got  and  what  it  should  have  received  being 
diverted  from  the  city  treasury.  Those  who  were  able,  through  political 
influence,    to    manipulate   the    disposal   of   these   park   privileges    were   the 

beneficiaries  at  the  city's  expense.  ^  .     r  -^ 

Not  only  was  the  city's  interests  damaged  in  the  mismanagement  of  its 
parks  through  these  improper  leases,  but  it  was  damaged  through  the 
misue  of  park  funds.  One  hundred  thousand  dollars  was  spent  in  one 
year  by  the  department  for  the  hire  of  teams  and  carts.  Some  of  these 
teams  which  were  supposed  to  have  been  hired  for  park  purposes,  were  never 
used,  and  it  was  discovered  in  one  year  that  65  teams  and  40  carts  which 
had  been  hired  supposedly  for  necessary  purposes,  were  engaged  from  a 
liveryman  through  a  political  agent  who  had  farmed  out  the  renting  privilege. 
The  city  was  clso  mulcted  in  the  extravagant  cost  of  feedmg  and  maintaining 
the  teams  which  it  hired,  and  the  horses  which  it  owned.  It  cost  the  city 
an  average  of  $55.84  to  feed  a  single  horse  each  month;  the  average  cost  for 
feeding  and  stabling  a  horse  in  any  other  part  of  the  city  being  not  more 

than  $30  a  month.  .         r  «i  1.      >»       j  • 

The  city  spent  $377,000  in  one  year  for  the  service  of  labor,  and  in 
that  year  it  was  discovered  that  the  city  had  two  foremen  for  six  laborers, 
and  that  these  six  laborers  had  no  work.  The  foremen  were  engaged  in 
debating  the  prospects  of  continuous  employment  with  these  inactive  laborers 
during  most  of  the  time  that  they  were  on  the  city's  payroll. 

These  are  only  some  of  the  incidental  details  which  made  it  as  relatively 
expensive  for  the  city  to  conduct  its  park  department  as  it  was  to  conduct 
other  city  departments.  The  park  department  had  under  its  control  a 
botanical  garden  and  a  zoological  range.  It  paid  from  $50,000  to  $200,000 
each  for  structures  to  house  the  animals  in  this  zoo,  and  at  the  end  of  eight 
years  the  cost  of  maintaining  and  improving  this  institution  was  $1,700,000. 
The  bills  for  these  improvements  and  expenditures  were  unchecked  because 


% 


« 


#1 


# 


Mi' 


fii 


the  Zoo  was  managed  by  a  so-called  private  society,  the  city  having  appro- 
priated the  land  and  provided  the  buildings,  the  society  supplying  the  animals. 
The  city  had  also  paid  out  approximately  $800,000  during  the  same  period  of 
eight  years  for  the  maintenance  and  improvement  of  the  botanical  garden, 
and  no  check  or  audit  of  these  expenditures  was  made,  because  of  the  same 
conditions. 

There  was  no  adequate  check  on  the  cost  of  supplies  used  by  the  Park 
Department,  and  no  adequate  record  kept  of  what  supplies  were 
purchased.  The  Department  had  on  its  payrolls  a  supervising  force  of  60 
or  70  men,  and  a  laboring  force  of  1,000,  and  most  of  these  were  supplied 
through  the  political  organization  of  which  the  head  of  the  department  or 
his  influential  friends  were  factors.  In  fact  an  investigation  disclosed  that 
of  135  vouchers  paid  to  employees,  90  of  them  went  to  members  of  one 
political  club. 

Another  illustration  of  how  the  city's  interests  were  injured  through 
the  sale  of  park  privileges  for  private  profit,  is  the  rental  of  stands  in  the 
lower  part  of  the  city.  Those  who  held  concessions  for  two  of  these  stands 
declared,  when  questioned,  that  they  would  prefer  to  pay  a  larger  sum  for  the 
privilege  to  the  city.  One  of  these  stands  was  afterward  let  under  con- 
tract, and  through  private  bidding,  for  $8,000  a  year,  and  the  lessee  was 
enjoying  a  handsome  profit  from  this  privilege  when  the  lease  was  cancelled 
by  the  city.  There  was  no  adequate  explanation  made  why  the  lease  was 
cancelled,  the  understanding  being  that  it  was  done  at  the  direction  of  the 
mayor  of  the  city  after  it  was  disclosed  that  a  friend  of  the  mayor  had 
secured  a  commission  from  the  lease.  The  cancellation  of  the  lease  cost 
the  city  about  $8,000  a  year,  because  the  stand  was  relet  at  only  a  nominal 
sum.  The  stand  could  have  produced  a  revenue  of  $12,000  a  year  instead 
of  $8,000,  but,  through  some  peculiar  conception  on  the  part  of  the  mayor, 
no  such  rental  was  permitted.  This  particular  stand  was  under  a  long 
flight  of  stairs  in  the  city's  park,  close  to  the  city  hall,  and,  instead  of  renting 
it  for  the  purpose  of  general  convenience  to  the  public,  it  was  rented  to  a 
woman  who  sold  flowers.  Her  receipts,  of  course,  were  not  sufficient  to 
warrant  anything  but  a  small  return  to  the  city  from  her  profits. 

There  were  a  great  many  boathouse  privileges  rented  along  the  city's 
waterfront  park  for  only  nominal  sums.  Many  of  those  who  held  the  privi- 
leges acknowledged  that  they  would  gladly  pay  more  than  the  rental  exacted, 
and  some  of  them  also  acknowledged  that  instead  of  paying  the  city  a 
proper  return  on  their  lease,  they  were  obliged  to  pay  the  difference  to 
a  person  of  influence. 

An  investigation  showed  that  the  accounting  method  of  the  Park 
Department  for  all  the  privileges  under  its  control  was  so  inadequate  that 
under  no  circumstances  was  it  possible  for  the  city  to  know  exactly  how 
much  money  it  derived  from  rentals  The  bank  deposits  showed  irregular- 
ities, and  park  receipts  were  found  to  have  been  used  by  city  employees  for 
private  purposes.  The  deposit  entries  seldom  agreed  with  the  rentals  stipu- 
lated, and  the  inference  was  clear  that  the  money  was  used  by  those  who 
were  responsible  for  rental  collections  and  deposits.  Investigations  showed 
frequent  discrepancies  between  receipts  and  deposits  exceeding  a  thousand 

86 


dollars  and  this  difference  was  usually  due  to  the  fact  that  the  money  belong- 
in?  to  the  city  was  used  by  responsible  park  -mployees. 
^  There  were  other  avenues  of  city  waste  and  injury,  financial  and  other 
wise    though  the  administration  of  its  parks.    Property  belongmg  to  the 
pirk  Deoartment    for  which  the  city  paid  large  sums,  was  appropriated  by 
Svate    SSI   who  felt  their  influence  of  sufficient  strength  to  prevent 
Sal  prosecution.     One  ranking  police  officer  stole  Aowers  from  the  par^ 
which  were  carted  to  his  home  in  a  police  patrol  wagon.     Other  city  em- 
nloSs  app^^^  expensive  flowers  in  their  own  way.     It  was  discov- 

ered  in  one  instance  that  a  park  employee  had  cut  down  cedar  tree    and 
used  the  lumber  to  make  a  wardrobe  and  other  useful  furniture    or  himself.    If 
was  also  dTscovered  that  park  dirt  was  used  to  fill  in  the  cellars  of  private 
homes     It  was  charged  that  great  waste  resulted  from  the  resoihng  of  the 
citrparks  at  a  cost  of  many  thousands  of  dollars,  and  it  was  charged  that^ 
natented  closet  had  been  provided  in  contracts  for  use  in  the  city  s  comfort 
Ens     These    stations  'were    constructed   under   ^he  jurisd^^^^^^^^^^^ 
Park  Deoartment.     It  was  well  known  that  music  in  the  city  s  parks  were 
fupplied  Cmus  cians   recommended  by  the   political   factors    and   in  mo 
aLs  the  music  masters  were  compelled  to  divide  their  Pf  ^^  ,-^^^^^^^^^^ 
nolitical  sponsor.    In  some  cases  money  was  paid  out  of  the  city  s  treasury 
?o    Jhe  se'rvkes  of  musicians  when  none  were  actually  employed,  those  re- 
ceivine  oav  being  unable  to  render  a  single  musical  instrument 

a!  one  toe  a  lake  in  the  city's  park  was  drained  of  water  in  the  dead 
of  winter    anT  an  explanation  advanced  to  those  who  resented  this  action 
was^at  the  water  was  drawn  off  in  the  interest  of  a  prvvate  skating  rrnk. 
Suring  that%rL  winter,  when  the  freezing  weather  would  have  kept  the 
ke  in  the  lake  hard  for  skating,  the  skating  rink  was  crowded  with  patrons. 
The  citv  spent  many  thousands  of  dollars  for  gymnasium  m  the  park, 
aside^frUle%en.air  'playgrounds  wh^h  were  provid^^^^^^^^^^^^ 
one  of  the  small  parks  in  the  congested  East  Side  of  the  city    ^n  outdoor 
^mnasium  was  constructed,  at  a  cost  of  $100,000.    The  annual  cost  of    he 
maTntenance    of   this    structure,    including    interest    on    the    bonds    for    the 
Tonstructron  of  the  gymnasium,  was  $8,000.    The  city  spent  several  hundred 
dXrs  a  year  besidfs' this  for  coal  for  heating  the  fT"'  ra^^Tf 
erecting  a  similar  park  gymnasium  in  another  part  of  the  city  at  a  cost  of 
$200,000  at  the  time  of  its  financial  failure.  «,  nnn  000 

The  city  had  acquired  two  seaside  parks  at  a  cost  of  more  than  $3>ooo,ocx)^ 
It  began  negotiations  for  one  of  these  parks  several  years  before  title  wa 
passed   and  ^at  that  time  those  who  owned  the  property  were  wi^^hng  to  ^el 
at  a  cost  of  $1,000,000   for  twice  the   area   actua Uy  taken     T^e   c^y  was 
obliged  to  pay  $1,250,000  for  the  property  when  it  took  title  to  the  parcel 
The  other  park  property  was  in  the  city's  crowded  summer  resort.     It  was 
.    IwLd  by  land  spS^^^^    and  politicians  who  had  conducted  an  amusement 
hippodrome  on  this  site.    A  fire  had  wiped  out  the  hippodrome  s  p-^^^^^^^ 
the   insurance   received  had   redeemed   the   mortgage   on  the   parcel     TW 
who  owned  the  property  had  issued  bonds  to  the  amount  of  a  million  doUars. 

The  Z^^llerehld  ly  politicians  and  ^-^^f^K^f^VZAt^^^^^ 
well  as  by  land  speculators,  and  at  the  time  of  the  aty's  co  lapse  i\ese  Persons 
were  engaged  in  trying  to  create  a  miUion  dollars  of  value  for  their  bonds. 

87 


a. 


Nil 


III! 


There  were  others  who  owned  some  of  these  bonds  who  paid  for  them  when 
issued.  The  collapse  of  the  city  resulted  in  a  saving  on  this  transaction,  the 
city  being  without  funds  to  pay  over  the  sum  required.  The  land  speculators 
had  retained  the  most  valuable  part  of  the  property  for  themselves  and  were 
selling  the  city  that  which  could  be  used  for  no  other  purpose  except  as  a 
bathing  beach. 

The  city  also  leased  the  privilege  of  operating  a  stage  coach  along  the 
drive,  and  it  extended  this  privilege  without  compensation.  A  complaint  was 
presented 'to  the  Park  Department  against  the  extension  of  this  privilege  to 
the  city's  drive.  An  opinion  of  the  city's  law  officer  was  prepared  to  the  effect 
that  the  operating  stage  company  had  no  legal  right  whatever  to  operate  its 
stages  on  the  city's  drive.  This  legal  opinion  was  submitted  to  the  Park 
Department,  who  restrained  the  stage  company  from  operating  on  the  drive, 
but  np  sooner  was  this  commisioner  out  of  office  than  the  privilege  was  re- 
extended  to  the  company,  in  the  face  of  the  opinion  of  the  city's  own  law  ofHcer. 

THE  MISMANAGEMENT  OF  THE  CITY'S  PARKS  WAS  AP- 
PARENT IN  ALMOST  EVERY  ACTION  TAKEN  BY  THE  RESPONSI- 
BLE OFFICIALS  OF  THE  DEPARTMENT  FOR  MANY  YEARS  PRIOR 
TO  THF  CITY'S  COLLAPSE.  IT  WAS  NOT  UNTIL  A  FEW  YEARS 
BEFORE  THE  CITY'S  FAILURE,  THAT  THE  MISMANAGEMENT 
OF  THE  PARKS  BECAME  GENERALLY  KNOWN.  THE  CITY'S 
GROWING  FINANCIAL  DIFFICULTIES  MADE  IT  NECESSARY 
THAT  STEPS  BE  TAKEN  TO  RECOVER  ALL  AVAILABLE  INCOME 
ON  CITY  PROPERTY.  IT  WAS  THROUGH  THIS  MEANS  THAT 
BY  DEGREES  THE  PEOPLE  BECAME  INFORMED  OF  THE  DE- 
TAILS OF  THE  MISMANAGEMENT  OF  CITY  PARKS  AS  WELL  AS 
OF  OTHER  PUBLIC  WRONGS.  OF  COURSE,  THESE  DISCOVERIES 
WERE  MADE  WHEN  IT  WAS  TOO  LATE  TO  RESTORE  THE 
CITY   TO    FINANCIAL    SAFETY. 


88 


CHAPTER  XII 

THE  LIVES  OF  THE  PEOPLE  WERE  IMPERILLED  AND 

THEIR  MONEY  WASTED  THROUGH  POLITICAL 

MISUSE  OF  THE  FIRE  DEPARTMENT 

The  city's  fire  department  was  in  the  hands  of  the  politicians  for  a  great 
many  years,  and  the  result  was  tragically  displayed  a  few  years  before  the 
dty's  financial  collapse,  when  a  large  loft  building  took  fire  Up  to  that  time 
the  city  had  purchased  quantities  of  rubber  hose  through  the  medium  of 
agents  representing  politicians,  at  prices  largely  in  excess  of  ^h^^^  ;^^^^^^- ^  V?^ 
inferior  quality  of  the  hose  was  not  discovered,  however,  until  this  terrible 
fire  when  the  lives  of  several  of  the  city's  fire-fighting  force  were  sacrificed 
It  was  then  discovered,  after  investigation,  that  practically  every  length  of 
hose  that  had  been  purchased  in  previous  years  was  bought  at  extravagant 
cost  to  the  city,  in  order  to  allow  a  large  margin  of  profit  to  political  inter- 
mediaries. ,  .  t    ,        .      u 

It  was  found  that  the  hose  used  at  this  particular  fire,  which  burst  when 
ordinary  water  pressure  was  applied,  was  purchased  through  an  agent  who 
hd  no  establishment  other  than  that  of  a  middleman's  office;  who  knew  noth- 
ing whatever  about  hose,  except  that  a  profit  was  made  out  of  it  at  the  ex- 
pense of  the  city.  It  was  found  that  thirty  lengths  of  hose  burst  at  this 
particular  fire  and  that  seven  of  these  lengths  were  purchased  withm  three 
years,  with  a  guarantee  of  quality.  The  investigators  also  found  that  but 
sixty.five  per  cent,  of  the  hose  in  use  in  the  department  was  of  serviceable 
quality,  and  that  the  city  was  in  peril  of  the  spread  of  conflagration  because 
of  their  inferior  quality  and  damaged  condition. 

The  investigators  also  found  that,  while  large  appropriations  of  money 
were  obtained  by  the  fire  department  from  the  city  for  the  ostensible  purpose 
of  purchasing  new  hose,  a  large  part  of  the  money  thus  appropriated  was 
diverted  to  other  use.  After  the  fire  referred  to,  the  politician  middleman, 
through  whom  the  fatal  hose  was  obtained,  was  compelled  to  disgorge  twenty 
thousand  dollars  to  the  city.  This  was,  at  the  time  this  same  middleman  was 
deputy  commissioner  of  the  city's  water  department,  presided  over  by  the 
politician  who  was  formerly  fire  commissioner  and  who  was  responsible  for  the 
purchase  of  the  inferior  hose  in  question.  This  politician  was  absolved  from 
responsibility  for  the  purchase  of  the  hose,  because  he  was  political  manager 
for  the  Mayor  then  in  oiHce. 

There  was  considerable  waste  of  public  funds  in  the  purchase  of  fire  ap- 
paratus, such  as  trucks,  engines  and  fireboats.  The  city  acquired  two  fire- 
boats  at  a  cost  of  a  quarter  of  a  million  dollars,  several  years  before  the  city  s 
collapse,  and  the  excess  payment  was  fifty  thousand  dollars.     These  con- 


li 


\m 


m\ 


i-i 


Hi 


tracts  were  let  during  the  administration  as  fire  commissioner  of  the  political 
manager  in  question  who  had  no  interest  in  the  city's  welfare,  who  was  an 
adventurer  in  public  office,  and  who  was  in  public  life  only  for  "what  there 
was  in  it." 

At  no  time  in  the  ten  years  prior  to  the  city's  collapse,  with  the  excep- 
tion of  less  than  a  year,  were  the  destinies  of  the  city's  fire  department  pre- 
sided over  by  a  really  competent  commissioner.  That  brief  period  was  when 
an  ex-fire  chief  was  elevated  to  the  deputy  headship  of  the  department,  just 
prior  to  the  death  of  the  fire-fighters  mentioned  as  a  result  of  the  bursting 
hose.  This  former  fire  chief  intended  that  the  department  should  be  re- 
stored to  discipline,  but  every  effort  in  this  direction  was  frustrated  by  the 
appointed  head  of  the  department,  who,  as  previously  stated,  was  the  Mayor's 
political  manager.  The  old  fire-fighter  was  subordinate  in  control,  and  his 
efforts  to  restore  discipline  were  checked  by  the  political  use  to  which  the 
department  was  put.  The  old  veteran  was  compelled  to  submit  to  the  mis- 
management until  the  scandal  of  the  bursted  hose  shocked  the  city,  after  he 
retired.  The  responsibility  for  this  scandal  was  then  thrown  on  the  district 
politician  who  had  succeeded  to  the  headship  of  the  department.  And  the 
politician  accepted  the  responsibility  in  order  that  the  mayor's  political  man- 
ager, who  was  formerly  in  control,  might  escape  public  censure.  The  polit- 
ical manager  was  at  this  time  in  control  of  the  city's  water  department,  where 
he  had  been  transferred  by  the  mayor.  His  agent  who  had  sold  the  city 
the  "rotten"  hose  the  bursting  of  which  resulted  in  the  death  of  two  firemen, 
vtas  then  his  deputy  in  command. 

Following  the  scandal  of  the  bursted  hose,  the  public  demanded  that  a 
non-political  commissioner  be  placed  at  the  head  of  the  fire  department.  This 
was  the  opportunity  for  the  veteran  fire-fighter  who  had  been  subordinated 
a  few  years  before  as  deputy  commissioner  of  the  department  because  of 
the  exigencies  of  politics.  He  was  restored  as  commissioner,  but  so  dis- 
couraging had  been  his  previous  experience  that  he  had  actually  worried 
himself  sick.  He  was  in  this  debilitated  condition  when  he  again  returned 
to  the  department,  and  the  hard  work  imposed  on  him  through  his  renewed 
efforts,  resulted  in  his  death.  He  was  vexed  and  harrassed  while  commis- 
sioner, and  his  friends  declared  that  his  hands  were  tied,  and  he  was  unable 
to  administer  the  affairs  of  the  department  as  they  should  be.  One  illustra- 
tion of  this  was  his  effort  to  remove  the  chief  of  the  Combustible  Bureau, 
when  he  learned  to  his  chagrin  that  this  official  was  the  appointee  of  the 
former  political  head  of  the  department,  who  prevented  his  removal.  The 
veteran  commissioner  was  also  contemplating  the  removal  of  the  secretary 
of  the  department  who  was  also  a  political  appointee,  when  he  was  informed 
that  the  removal  must  not  take  place.  Such  discouragement  hastened  his 
death,  which  occured  less  than  a  month  after  he  resumed  office. 

As  a  result  of  the  political  mismanagement  of  the  fire  department,  the 
efficiency  of  the  fire-fighting  force  was  greatly  impaired.  The  chief  of  the 
department,  the  head  of  the  uniformed  force,  was  a  young  fire-fighter,  who, 
though  elevated  through  politics,  was  competent  for  the  position,  and  able  to 
maintain  discipline.  His  control  of  the  rank  and  file  was  usually  interfered 
with  by  the  appointed  head  of  the  department,  and  this  conflict  of  authority 

90 


was  brought  to  a  head  a  few  years  before  the  city's  collapse  A  young  man 
of  arrogant  disposition  and  conduct  was  appointed  to  the  headship  of  the 
department,  and  immediately  thereafter,  a  clash  of  authority  occurred.  The 
law  clearly  defined  the  duties  of  the  fire  chief,  but  these  were  overridden 
by  the  commissioner  on  nearly  every  occasion.  The  commissioner  was  an- 
xious to  elevate  certain  members  of  the  uniformed  force  to  the  rank  ot 
deputy  chief  and  was  also  anxious  to  manipulate  the  transfer  of  other  mem- 
bers of  the  force.  This  manipulation  was  resisted  by  the  chief  and  the  up- 
shot of  the  antagonism  was  that  the  latter  was  retired  on  a  pension  m  order  to 
relieve  the  strain  in  the  department. 

The  lives  of  those  who  worked  in  the  crowded  city  factories  were  virtu- 
ally within  the  keeping  of  the  fire  department,  charged  with  the  responsi- 
bility of  enforcing  proper  safeguards  in  factory  buildings.  The  department 
employed  inspectors  at  fair  salary  to  insure  the  protection  of  factory  workers 
and  to  superintend  the  condition  of  factory  buildings.  Most  of  these  so- 
called  inspectors  were  merely  political  dependents,  the  sole  purpose  of  their 
employment  being  to  provide  for  them  at  the  expense  of  the  city.  The  tragic 
result  of  the  inefficiency  of  this  inspection  service  was  a  fire  in  a  shirtwaist 
factory  which  resuUed  in  the  death  of  more  than  one  hundred  persons,  mostly 
women.  The  city  had  on  its  payroll  up  to  that  time  about  a  score  of  these 
so-called  inspectors,  none  of  whom  did  an  efficient  day's  work.  The  city  again 
learned  a  lesson  from  this  fatal  fire,  just  as  it  learned  from  the  tragedy  which 
preceded  it  because  of  the  inferior  quality  of  hose.  The  city  was  paying 
thousands  of  dollars  annually  for  so-called  "fire  inspection,"  just  as  it  paid 
hundreds  of  thousands  dollars  for  hose  of  inferior  quality. 

The  annual  administration  expense  of  the  fire  department  was  more 
than  ten  million  dollars,  most  of  which  went  for  salaries.  A  few  years 
before  the  collapse  of  the  city,  a  request  was  made  for  three  million  dollars 
for  new  buildings,  and  a  million  dollars  for  the  employment  of  so-called 
"fire  prevention  inspectors."  This  new  bureau  was  the  outcome  of  the  ca- 
tastrophe which  resulted  in  the  death  of  so  many  factory  workers.  The  main 
purpose  of  the  prevention  bureau  was  to  provide  additional  places  for  political 
dependents. 

During  the  last  few  years  of  the  city's  solvency,  the  fire  department 
embarked  on  the  purchase  of  electrically  propelled  fire  appliances.  The  cost 
of  a  single  fire  engine  was  more  than  five  thousand  dollars,  and  of  a  single 
fire  truck  from  eight  to  twelve  thousand  dollars.  These  expensive  apparatus 
were  purchased  virtually  without  competition  and  their  cost  imposed  a  heavy 
burden  on  the  taxpayers.  The  expenditure  for  repairs  was  far  greater  than 
that  of  other  apparatus  propelled  by  horses,  the  cost  of  which  was  about 
one-half  those  electrically  propelled. 

When  the  new  fire  prevention  law  went  into  effect,  it  was  charged  that 
one  of  the  purposes  of  the  law  was  to  enforce  the  use  of  a  patent  sprinkler 
in  factory  buildings.  This  charge  seemed  to  be  sustained,  and  the  accusa- 
tion was  made  that  the  pressure  of  poHtics  was  brought  to  bear  in  each 
building  where  the  sprinkler  was  to  be  installed,  at  a  cost  of  from  one  to 
ten  thousand  dollars  each.  It  was  within  the  power  of  the  fire  prevention 
bureau  to  endorse  the  use  of  the  style  of  sprinkler,  and  this  endorsement 

91 


i 


w 


;ir 


{ 


lj[lf: 


virtually  carried  with  it,  compulsory  use  of  certain  sprinklers  In  connec- 
tion with  this  sprinkler  item,  it  was  charged  that  a  group  of  fire  insurance 
promoters  were  interested  in  the  sprinklers  which  were  mdorsed  by  the 
fire  prevention  bureau.  .  •  i. 

There  was  a  general  mishandling  of  the  city's  funds  in  connection  with 
the  administration  of  the  fire  department,  and  one  effort  to  spend  several 
hundred  thousand  dollars  for  concrete  fire  houses  was  prevented  by  the  dis- 
closure that  this  experiment  in  public  building  would  cost  the  city  two  hun- 
dred thousand  dollars  more  than  the  use  of  brick  in  the  construction  of  the 
buildings  The  fire  commissioner  had  requested  bids  on  twenty-one  new 
buildings  of  concrete  style,  but  before  the  contracts  were  awarded,  an  in- 
iunction  was  served,  and  the  plan  was  not  carried  out.  There  were  only 
three  bidders  on  concrete  construction  for  the  twenty-one  new  fire  houses, 
though  when  the  specifications  were  changed  and  brick  construction  pro- 
vided the  number  of  bidders  increased  to  fourteen.  This  proposed  ex- 
penditure for  concrete  construction,  as  well  as  the  expenditure  of  several 
hundred  thousand  dollars  for  new  automatic  self-propelling  fire  machines, 
were  applauded  in  the  newspapers  as  evidence  of  the  "progressive  manage- 
ment of  the  fire  department."  This  "progressiveness  entailed  the  useless 
expenditure  of  vast  sums  of  money,  but  so  far  as  the  newspapers  were  con- 
cerned, it  merely  meant  the  publication  of  an  interesting  item  of  news. 

The  facts  as  presented  in  the  newspapers  were  usually  compiled  and 
orepared  by  petty  departmental  press  agents  who  were  drawing  salaries  from 
the  city  as  "secretaries"  or  in  other  capacities,  and  these  were  presented 
in  such  light  as  to  mislead  the  public  as  to  the  need  for  the  expenditure. 
These  items  of  news  were  supplied  to  the  representatives  of  the  daily  press 
whose  duty  it  was  to  gather  departmental  news  and  who  were  willing  to 
accept  whatever  data  was  prepared  for  them  in  advance  by  these  interested 
office  holders.  Just  prior  to  the  city's  collapse,  there  was  actually  in  the 
course  of  construction  forty-five  new  buildings  for  the  use  of  the  fire  depart- 
ment at  a  total  cost  of  three  and  a  half  miUion  dollars.  During  the  preced- 
ing fourteen  years,  less  than  that  number  of  buildings  was  erected  for  the  use 
of  the  are  department.  The  extraordinary  expenditure  was  announced  to  the 
public  as  a  "great"  municipal  achievement. 

It  was  in  connection  with  this  effort  to  feed  the  public  with  news  of 
a  manufactured  character  that  the  head  of  the  fire  department  exploited  him- 
self to  the  public  in  a  dramatic  way.  He  disclosed  the  fact  that  the  city 
was  overrun  with  "fire-bugs"  who  destroyed  an  average  of  four  million  dol- 
lars worth  of  property  a  year  for  the  purpose  of  collecting  msurance,  and 
he  announced  that  the  fire  department  itself  had  obtained  insurance  to  the 
amount  of  $125,000  on  property  worth  less  than  four  dollars.  This  announce- 
ment was  made  with  the  instinct  of  a  newspaper  reporter  whose  methods 
were  dramatic.  It  was  controverted  by  the  representatives  of  insurance  com- 
panies, and  the  discussion  which  followed  only  aided  the  notoriety  of  the  com- 
missioner. 

Hi«  report  on  "fire-bugs"  was  prepared  in  most  attractive  newspaper 
style  He  also  advertised  the  result  of  his  investigation  not  only  through 
the  public  print,  but  also  through  the  medium  of  "fire-bug  exhibit,"  where 

92 


all  the  implements  of  incendiarism  were  displayed.  Photographs  of  so-called 
fire-bugs  were  published  in  the  fire  commissioner's  report,  as  were  pictures 
of  places  that  had  been  set  on  fire,  effort  being  made  to  show  the  use  of  oil 
and  other  inflammable  material.  The  achievement  was  worthy  of  the  best 
effort  of  high-priced  advertising,  and  the  result  was  commendable  from  that 
point  of  view  as  well  as  from  the  point  of  view  of  intimidating  the  profes- 
sional fire-bug. 

The  whole  purpose  of  city  administration  seemed  to  be  the  opportunity 
for  self-exploitation  by  the  heads  of  the  various  city  departments,  the  suc- 
cess of  the  fire  commissioner  overshadowing  that  of  other  department  heads. 
A  mayoralty  election  was  approaching  and  the  fire  commissioner's  friends 
hoped  that  his  success  as  advertised  might  win  for  him  a  higher  reward. 
The  result  was  disappointing,  because  the  PEOPLE  RECOGNIZED  THAT 
THE  TIME  HAD  ARRIVED  FOR  GENUINENESS  IN  PUBLIC  OFFICE 
IN  ORDER  THAT  THE  CITY  MIGHT  BE  RESTORED  TO  A  PROPER 
FINANCIAL  BALANCE. 


■•!* 


j^ 


^ 


Hi 


Q^ 


The  Taxpayer's  Desperate  Struggle  to  Save  His  Property 


$6,000,000  IMTtKgOH 
MtW   SUBWAY  BOWS 


1 


$  50000.0CX). 

fflft^tWMIEWT*  PUBLIC     IMPM«Me)ffS 

FOR  qWlRM^WWSTRfflOM 

$IOD,OOQOO< 

NIW   VOUK    OTY'S 
FUNDED    DEBT 


MO 


.»3i 


^TAy^^ft^^ 


^"^XM 


~% 


rrte^ife^hMUtear  n  nirf  Itat  W  per  ewii  if  »•  dty't  twiiial  eipenditiires  is  heme  fcy  the  taxpeyw. 
(Ike  UNfe  *~  ^JJ^^i,^       ««t  f«y  their  shere^rf  the  bedlords-  hurden.) 


Reproduced  from  Klein's  WEE*.l^  News,  May  2,  1913 

94 


i;i. 


CHAPTER   XIII 

THE    CITY    WAS    ROBBED    OF   MILLIONS    OF    DOLLARS 
THROUGH  THE  ACQUISITION  OF  LAND  FOR  PUB- 
Lie  USE— INNOCENT  INVESTORS  WERE  VIC- 
TIMIZED BY  LAND  SPECULATORS 

The  city  at  the  time  of  its  collapse  was  wasting  money  in  more  ways  than 
it  was  possible  to  tell.  It  had  as  already  stated,  squandered  fully  fifty  million 
dollars  in  ten  years  on  property  purchased  from  private  owners,  for  which 
Ae  city  had  no  immediate  use.  These  purchases  were  made  mainly  because 
of  the  influence  used  to  induce  the  city  to  acquire  the  property.  It  was  shown 
at  the  time  of  the  city's  collapse,  that  the  educational  department  alone  held 
property  for  which  it  paid  fourteen  million  dollars  and  for  which  it  had  no  use. 
The  parcels  were  purchased  so  that  some  influential  citizen  or  politician  might 
be  able  to  reap  profits.  It  is  needless  to  recall  the  various  details  of  these 
purchases,  and  the  location  of  each  parcel,  because  the  practice  in  each  case 
was  the  same. 

As  already  told,  the  city  paid  millions  of  dollars  for  property  acquired, 
for  the  approach  to  new  bridges  and  millions  more  for  the  widening  of  streets 
through  which  the  underground  railroad  runs.  At  the  time  of  the  city's  failure, 
it  was  negotiating  for  the  purchase  of  a  block  of  waterfront  from  a  ferry 
company  which  originally  acquired  it  for  only  a  nominal  sum  from  the  State. 
The  price  demanded  was  two  million  dollars.  It  had  already  paid  millions  of 
dollars  in  excessive  awards  for  parcels  of  ground  for  park  purposes  and  some 
of  these  parks  were  named  after  politicians  who  through  their  "dummies" 
made  large  profits  by  the  sale  of  property  to  the  city. 

The  city  had  paid  millions  of  dollars  for  parcels  of  ground  on  which  fire 
houses,  police  stations  and  other  public  buildings  were  erected,  one  of  the  most 
expensive  sites  being  that  occupied  by  the  new  municipal  building.  It  paid 
millions  of  dollars  for  land  in  the  new  water  shed,  some  of  which  was  pur- 
chased at  ten  times  its  actual  value.  It  was  shown  when  some  of  these  pur- 
chases were  made,  that  the  Mayor's  political  manager  was  interested  in  the 
ownership  of  some  of  this  property,  and  it  was  also  shown  that  his  agents 
purchased  large  tracts  of  land  along  the  line  of  the  new  acqueduct  that  brought 
the  water  from  the  new  watershed  to  the  city.  The  line  of  this  acqueduct  was 
shifted  several  miles  from  the  location  originally  laid  out  by  the  city's  en- 
gineers and  the  change  was  made  after  this  politician's  agents  acquired  most 
of  the  property  along  the  new  route.  In  spite  of  the  disclosure  the  commis- 
sioners in  condemnation  appointed  for  political  reasons  at  from  fifty  to  one 
hundred  dollars  a  day  each  and  expenses,  persisted  in  their  awards  and  par- 
celled out  the  city's  money  with  such  lavishness  that  by  the  time  the  first  section 

95 


i 


i 


of  the  watershed  was  finished,  it  was  realized  that  the  original  estimate  oi 
cost,  of  one  hundred  and  sixty-one  millions  of  dollars,  would  be  exceeded  by 
twenty-five  million  dollars. 

The  waste  of  the  city's  money  for  the  purchase  of  land  for  which  the  city 
had  no  immediate  use,  was  about  the  same  in  every  proceeding,  where  property 
was  acquired,  except  that  in  some  cases  the  waste  was  greater  than  m  others, 
and  the  profits  to  insiders  was  relatively  larger.     For  many  years,  this  ''con- 
demnation graft"  was  one  of  the  most  fruitful  sources  of  gam  for  political 
insiders  and  their  friends  at  the  expense  of  the  city,  and  in  the  short  space  of 
a  dozen  years  it  netted  a  personal  profit  of  four  million  dollars  to  one  lawyer 
engaged  in  this  work  and  a  total  profit  of  twenty-five  million  dollars  to  a  sinjll 
group  of  politicians  and  real  estate  speculators  who  soon  blossomed  into  the 
class  of  "leading  citizens."     One  of  these  successful  condemnation  lawyers 
afterwards  became  a  judge  on  the  city's  criminal  bench;  another  became  a 
leader  in  society.    Citizens  other  than  lawyers,  were  made  rich  for  life  through 
these  condemnation  practices.    It  was  only  toward  the  end  of  the  city's  financial 
solvency  that  the  enormous  profits  of  condemnation  were  disclosed  to  the  public 
when  a  young  lawyer  whose  clients  included  most  of  the  land  speculators  and 
influential  politicians,  over-reached  himself  in  his  greed  for  wealth.    He  was 
exposed  in  his  cunning  practices  and  disbarred.    He  had,  however,  accumulated 
several  million  dollars  before  he  fell. 

The  sale  of  property  through  condemnation  to  the  city  was  so  profitable 
that  even  a  school  principal  was  tempted  to  engage  in  the  practice.  For  many 
years  this  principal  sold  to  the  city  parcels  of  property  through  persons  who 
acted  as  "dummies,"  that  is,  agents  who  ostensibly  "owned"  the  property  for 
the  purpose  of  the  sale.  When  the  disclosure  of  the  exorbitant  prices  paid  for 
some  of  the  parcels  was  made  during  the  last  few  years  of  the  city's  solvency, 
the  principal's  practices  were  fully  exposed.  It  was  then  found  that  some  of 
the  "dummies"  from  whom  the  city  purchased  property  were  school  teachers 
who  were  unaware  that  their  names  had  been  used.  The  principal  was  dis- 
missed from  his  position  and  the  result  of  his  unworthy  speculations  was  that 
in  the  end  he  was  as  poor  as  when  he  began. 

Condemnation  of  property  by  the  city  furnished  a  harvest  for  a  great  many 
persons.     In  each  case  where  property  was  condemned,  commissioners  were 
appointed  to  take  testimony  on  the  value  of  the  land  in  question.    These  com- 
missioners were  paid  from  ten  to  one  hundred  dollars  for  each  day  on  which 
they  sat.     In  most  cases  these  commissioners  were  selected  for  political  or 
personal  reasons.     At  one  time  an  association  of  merchants  investigated  the 
cost  of  acquiring  property  for  the  city  and  discovered  that  in  most  cases  the 
proceedings  were  so  long  drawn  out  that  the  cost  of  acquiring  the  property 
sometimes  exceeded  the  total  awards.     Only  in  rare  cases  were  the  awards 
on  a  par  with  the  actual  value  of  the  property  acquired.    In  most  cases  the 
awards  were  several  times  more  than  the  actual  value  of  the  property.    The 
association  of  merchants  estimated  that  in  a  series  of  proceedings  extending 
over  a  period  of  ten  years,  where  property  was  acquired  to  prevent  the  pollu- 
tion of  the  city's  water,  the  awards  totalled  two  million,  five  hundred  and  sixty- 
seven  thousand  dollars  and  the  expense  of  the  commissions  which  made  these 
awards  amounted  to  three  million,  three  hundred  thousand  dollars.    It  also  dis- 

96 


ii 


covered  that  the  commissioners  who  sat  in  these  proceedings  were  selected 
mainly  for  political  reasons. 

A  complete  list  of  all  the  condemnation  proceedings  extending  over  ten 
years  was  compiled  by  this  association  and  the  exact  cost  determined  in  each 
case.  It  was  easy  to  see  when  the  list  was  compiled  alphabetically,  how  many 
times  each  commissioner  served  in  different  proceedings,  and  how  much  he  was 
paid.  The  disclosure  was  sufficient  to  convince  the  most  partisan  that  the 
system  under  which  these  parcels  of  property  was  acquired,  was  ruinous  to 
the  city's  interest. 

A  few  years  before  the  city's  collapse,  a  report  was  compiled  by  the  city's 
comptroller  showing  similar  abuses  by  condemnation  commissioners  who  were 
appointed  in  subsequent  proceedings.  The  report  showed  the  various  ad- 
journed meetings  for  which  commissioners  were  paid  from  fifty  to  one  hun- 
dred dollars  each.  In  other  words,  the  city  paid  each  time  one  or  two  of  the 
commissioners  got  together  and  postponed  their  work  for  the  day.  The  report 
also  showed  how  the  city  paid  two  thousand  six  hundred  dollars  a  lot  for  prop- 
erty that  zvas  assessed  at  forty-four  dollars  a  lot,  and  the  total  sum  paid  by  the 
city  at  this  rate  was  two  hundred  and  forty-seven  thousand  dollars.  This  was 
in  the  proceeding  by  which  the  city  acquired  a  tract  of  land  along  the  water- 
front at  the  mouth  of  a  trunk  sewer  in  an  outlying  borough,  for  bathing  pur- 
poses. It  goes  without  saying,  that  the  property  was  never  used  for  that  pur- 
pose because  of  its  unhygienic  location. 

This  same  city  official  also  prepared  a  report  for  the  Governor  of  the 
State  and  the  legislature,  in  which  he  showed  that  the  city  actually  paid  out 
thirteen  million,  five  hundred  and  thirty-two  thousand  dollars  in  one  year  for 
property  acquired  through  condemnation,  for  street  opening  and  park  purposes 
and  for  other  public  uses.  He  also  showed  that  most  of  this  property  was 
purchased  without  the  possibility  of  immediate  use  and  that  the  city  was  obliged 
to  pay  hundreds  of  thousands  of  dollars  annually  in  addition  to  the  awards,  as 
interest  on  these  investments.  During  that  same  year,  the  city  acquired  prop- 
erty for  six  million  dollars  through  private  purchases  without  condemnation, 
the  total  sum  spent  that  year  by  the  city  for  private  property,  being  twenty 
million  dollars. 

In  the  case  of  an  extension  to  the  city's  Drive,  the  commissioners  reported 
an  award  of  one  million  dollars.  The  city's  financial  officer  considered  the 
award  excessive  and  moved  for  the  appointment  of  new  commissioners.  The 
final  report  of  the  commission  was  reduced  to  six  hundred  thousand  dollars, 
showing  that  the  actual  waste  of  city  funds  in  this  particular  case,  would  have 
been  four  hundred  thousand  dollars.  The  property  owners  were  satisfied  with 
their  award  and  it  is  reasonable  to  conclude  that  they  derived  a  fair  profit  out 
of  the  six  hundred  thousand  dollars  which  was  finally  paid. 

Another  illustration  of  how  the  city's  money  was  squandered  through 
condemnation  was  the  report  of  the  commission  which  recommended  that 
one  million  dollars  be  paid  for  property  acquired  as  the  approach  to  a  new 
bridge.  The  city's  financial  officer  protested  against  the  award  and  the  property 
owners  finally  accepted  a  reduction  of  ten  per  cent.,  saving  the  city  one  hundred 
thousand  dollars.  The  city's  financial  officer  also  at  this  time  prepared  a  report 
showing  how  fees  were  paid  to  commissioners  for  services  which  they  did  not 

97 


"'  \ 


u 


i 


II 


'i 


f 


i 


, 


4 


r 


«l 


perform.  The  report  showed  that  the  proceedings  were  extended  far  beyond 
a  reasonable  time  and  that  the  commissioners  were  credited  with  sittings  in 
excess  of  their  actual  number. 

The  report  also  showed  how  the  awards  were  fixed  arbitrarily  by  the 
commissioners  and  that  no  expert  knowledge  of  the  value  of  property  was 
displayed  in  the  final  appraisal.  It  showed  that  where  the  expert  for  the  prop- 
erty owner  swore  that  the  property  was  valued  at  a  given  figure,  and  the  city's 
experts  appraised  the  value  far  below  that  figure,  the  commissioners  usually 
compromised  the  difference,  in  fixing  their  award.  The  city's  financial  officer 
also  showed  that  where  property  was  acquired  in  the  new  watershed,  the  cost 
of  these  proceedings  was  not  less  than  an  average  of  forty  per  cent,  of  the 
total  award. 

The  financial  officer's  report  also  showed  that  the  land  syndicates  which 
acquired  a  large  part  of  the  watershed  property  in  anticipation  of  its  purchase 
by  the  city,  actually  succeeded  in  obtaining  options  on  more  than  five  thousand 
acres  of  land  that  the  city  was  compelled  to  purchase.  Many  of  these  syndi- 
cates claimed  damages  for  fancied  rights  on  their  property,  such  as  the  right 
of  cutting  ice  on  streams  which  they  claimed  to  own,  the  right  of  fishing,  the 
right  of  utilizing  water  for  mill  operations  and  numerous  other  rights  which 
it  was  claimed  were  damaged  or  destroyed  by  the  city  and  in  return  for  which 
claims  for  excessive  sums  were  made.  These  claims  were  so  various  that  it 
is  profitless  to  tell  of  the  details.  In  each  case,  however,  the  city  was  obliged 
to  defray  the  cost  of  experts,  who  testified  in  behalf  of  claimants,  this  ex- 
penditure being  required  under  the  act  which  authorized  the  city  to  acquire 
property  for  the  new  watershed.  This  same  act  made  it  mandatory  for  the 
city  to  spend  three-quarters  of  a  million  dollars  for  advertising  the  proposed 
condemnation  proceeding  in  the  newspapers.  These  papers  were  selected  by 
the  mayor  and  large  commissions  were  paid  to  advertising  agents  who  were 
influential  with  the  city  administration. 

The  report  of  the  city's  financial  officer  showed  that  some  of  these  news- 
papers received  as  much  as  fifty  thousand  dollars  in  the  first  three  years  of  the 
condemnation  proceedings,  and  that  some  of  the  weekly  newspapers  which 
had  no  circulation  or  standing,  were  patronized  at  the  expense  of  the  city  to 
the  extent  of  many  thousands  of  dollars.  It  might  be  mentioned  that  the 
services  of  "experts"  employed  by  the  city  in  all  condemnation  proceedings, 
were  expensive  and  the  report  compiled  by  the  city's  financial  officer  shows 
that  in  the  space  of  three  years,  three  of  these  "experts"  received  a  total  of 
one  hundred  and  forty-five  thousand  dollars.  During  these  three  years  the 
city  employed  at  least  one  hundred  so-called  "experts"  in  land  appraisals,  and 
their  services  involved  an  expenditure  of  one  million  dollars.  These  experts 
were  selected  largely  because  of  their  political  affiliation  and  in  some  cases 
they  were  obliged  to  divide  their  fees  with  their  "backers.'* 

Another  phase  of  this  condemnation  matter  which  was  disclosed  to  the 
public  a  few  years  before  the  city's  collapse,  was  the  practice  of  delaying  the 
filing  of  assessments  on  property  where  improvements  had  been  made  at  the 
expense  of  the  people.  These  assessments  were  levied  by  the  commissioners 
in  condemnation  who  were  also  appointed  as  assessors,  and  their  assessments 

98 


were  submitted  to  the  heads  of  the  various  boroughs  who  forwarded  them  to 

'''  IT;Js  tTo^tL'^'f  ^^^^^^^      land  speculators  sold  unimproved 

proplrty  fn  the  outlaying  partYof  the  city  and  sold  them  />--7^  ^/^^.^^^ 

Tlr  J  assessment!.     Most  of  those   who  purchased  P^^P^^-^M^^^^^ 

Ivelooers  were  uninformed  of  the  procedure  involved  in  the  opening  of  new 

Jreets  and  fn  the  grading  and  paving  of  these  streets.    They  purchased  parcels 

rthebeltf  that  f hey  were  clear  of  all  expenses  beyond  the  price  mentioned 

n  the  deed.  No  sooner  were  they  the  owners  of  record  of  these  parcels,  than  they 

were  informed  by  the  tax  office  that  assessments  for  various  amounts  were 

r/istered  r^ainst  their  property.     These  investors  in  this  way  learned  that 

Z'uaTof  hlZgacquirfd  tleir  parcels  free  and  clear  for  the  sum  ment^oned 

Z  the  deed,  that^hey  actually  owed  the  city  large  sums  for  assessments  whch 

had  been  pending  against  the  property  for  months  and  3'^^^^. 

This  practice  was  carried  to  such  an  extent  that  an  mvestigation  was 
finai  be^n  and  it  was  discovered  that  through  the  dishonesty  of  city  em- 
ploy Lre^onlle  for  the  recording  of  these  assessments,  ^-ent  in-st^^^^^^ 
were  burdened  with  extra  charges  on  their  property.  One  of  the  city  officials 
Then  quest'ned  about  this  matter  at  this  time  said:  "It  is  heartrending  and 
wicked  to  see  these  poor  property  owners  come  here  day  after  day  to  leam 
^hy  they  are  assessed  They  tell  us  they  bought  the. property  free  and  dear 
and  exhibit  a  title  guarantee  poHcy  to  prove  their  claim  They  did  not  know 
they  were  buying  a  debt  with  the  property,  and  they  break  down  and  weep 

''''"\ll'lol^mn^on  lawyer  who  was  subsequently  disbarred  had  reaped 
large  profits  for  himself  and  land  speculating  clients  through  his  success  in 
delaying  the  filing  and  recording  of  these  improvement  assessments.  This 
particular  lawyer  received  a  fee  of  twenty-five  per  cent,  from  his  speculator 
clients  for  withholding  the  fiUng  of  these  assessments,  and  he  also  prevented 
the  city  from  collecting  these  assessments  which  it  had  paid  in  advance,  by 
holding  up  their  filing.  At  one  time  the  total  sum  outstanding  which  the  city 
had  laid  out  for  improvements  was  twenty-five  million  dollars,  not  a  dollar  of 
which  was  collectable  because  assessments  were  unrecorded,  this  lawyer  ana 
others  having  contracted  to  earn  large  fees  by  delaying  the  recording 

The  city  had  also  paid  several  million  dollars  in  awards  for  damages 
alleged  to  have  occurred  through  the  change  of  grade  of  city  streets  because 
of  bridge  construction.  An  investigation  disclosed  that  most  of  these  alleged 
damages,  on  which  large  awards  were  claimed,  were  no  damages  at  all,  but 
were  decided  improvements  to  the  property.  Before  the  .dishonesty  of  these 
claims  was  discovered  large  fees  were  obtained  by  condemnation  lawyers  be- 
cause of  their  success  in  inducing  the  city's  assessors  to  make  the  desired 
awards.  The  practice  was  sharply  condemned  by  official  investigating  body 
after  these  alleged  change  of  grade  improvements  was  thoroughly  in- 
vestigated. It  was  discovered  that  here,  as  well  as  in  regular  condemnation 
proceedings,  the  city  was  damaged  to  the  extent  of  many  hundreds  of  thou- 
sands  of  dollars. 


f 


I 


99 


r{ 


100 


CHAPTER  XIV 

VAST    FORTUNES    WERE    MADE    OUT    OF    CITY    FRAN- 
CHISES AND  THE  PEOPLE  WERE  GROSSLY  OVER- 
CHARGED  AND    DEFRAUDED    BY    SWIND- 
LING     FINANCIAL     OPERATIONS 

At  the  time  of  the  city's  collapse,  the  largest  private  fortunes  were  owned 
by  those  who  profited  from  public  franchises.  The  city  had  portioned  out  all 
of  its  public  rights  to  private  individuals,  and  the  climax  of  this  dissipation 
of  its  franchise  riches  was  reached  just  before  the  failure  of  the  city  was 
announced.  The  city's  responsible  officials  had  entered  into  a  contract  for 
the  operation  of  its  new  underground  railroad  on  terms  that  were  ruinous 
to  the  city.  Under  the  contract  the  city  was  to  spend  approximately  one 
hundred  and  sixty-five  million  dollars  for  the  construction  of  a  new  under- 
ground road,  and  the  railroads  were  to  provide  about  the  same  amount  for 
equipment  and  to  help  construct  this  new  road. 

The  operating  terms  were  such  that  the  invested  private  capital  was  first 
protected,  and  the  city's  interest  was  not  considered  until  after  a  guaranteed 
profit  of  8^4  per  cent,  was  provided  to  the  operating  company.  This 
guarantee  made  the  bonds  issued  by  the  financiers  and  sold  to  a  syndicate 
of  their  own,  of  particular  value,  and  the  syndicate  realized  fifteen  million 
dollars  profit  for  themselves  out  of  this  financial  transaction.  At  the  same 
time,  the  operating  company  was  exempt  under  the  contract  from  paying  a 
franchise  tax  on  the  subway  property,  every  other  public  service  corporation 
being  obliged  to  pay  the  tax  under  the  law.  This  exemption  meant  a  matter 
of  four  million  dollars  each  year  to  the  company.  The  only  theory  on  which 
the  exemption  was  based  was  that  the  railroad  was  a  municipal  property.  So 
far  as  the  profits  of  the  subway  were  concerned,  its  municipalization  was  in 
name  only — the  profits  going  to  the  financiers  and  the  operating  company. 
This,  in  a  lesser  degree,  was  the  history  of  every  municipal  franchise,  and 
the  story  of  these  franchises  is  the  story  of  the  growth  cf  the  fortunes  of  the 
city's  most  influential  families. 

In  the  beginning  of  the  city's  development,  the  principal  fortunes  were 
derived  from  the  franchise  for  ferry  operations.  The  city  was  small  and  the 
residents  were  clustered  along  the  water  front  in  the  lower  part.  Traffic  was 
heavier  then  across  the  river  to  the  neighboring  city,  and  ferry  operation 
soon  became  profitable.  These  franchises  were  granted  by  the  municipal 
assembly  to  those  of  political  and  public  influence  at  the  nominal  rental  of 
one  thousand  dollars  a  year.  After  a  few  years  it  was  discovered  that  the 
profits  of  these  franchises  were  so  enormous  that  those  who  obtained  them 
were  soon  numbered  among  the  city's  wealthiest  families.  The  offer  was  then 
sTsade  to  increase  the  city  revenue  from  the  operation  of  these  ferries  and  the 

lOI 


t 


*i 


:|i 


to 


agitation  finally  resulted  in  an  increase  in  franchise  rental.  Instead  of  receiv- 
ing one  thousand  dollars  a  year,  the  city  derived  an  income  of  twenty  thousand 
dollars  from  some  of  the  franchises. 

As  the  city  grew,  its  income  from  these  ferry  franchises  increased  to 
a  total  of  a  quarter  of  a  million  dollars  a  year  and  was  approximately  at 
that  sum  a  few  years  before  the  city's  financial  collapse.  The  city  had  in- 
vested one  hundred  million  dollars  in  the  construction  of  new  bridges,  and 
with  their  operation,  the  holders  of  the  ferry  franchises  claimed  that  ferry 
profits  decreased.  Their  claim  was  so  strongly  urged,  coupled  with  the  threat 
that  they. would  cease  ferry  operation,  that  the  city  was  actually  induced  to 
subsidize  one  of  the  ferry  companies  at  the  rate  of  one  hundred  and  eighty 
thousand  dollars  a  year,  while  it  took  over  the  property  of  other  ferry  com- 
panies at  several  times  their  actual  value.  When  the  city  became  financially 
involved,  it  was  operating  one  of  the  ferries  at  a  deficit  of  one  million  dollars 
a  year.  During  the  sixty  or  seventy  years  of  ferry  operation  it  can  be  con- 
servatively estimated  that  a  total  profit  of  at  least  one  hunderd  million  dollars 
was  distributed  among  the  fortunate  shareholders  of  the  ferry  companies.  The 
city's  profit  during  that  period  was  insignificant  compared  to  this  sum,  and 
its  losses  on  subsidized  and  municipalized  ferry  operation  during  the  last  few 
years  of  its  solvency  reduced  this  income  of  more  than  sixty  years  to  virtually 
nothing. 

Fortunes  from  ferry  franchises  alone,  however,  were  insignificant  com- 
pared to  those  reaped  by  financiers,  politicians  and  other  "leading  citizens" 
from  other  city  franchises.  Prior  to  the  construction  of  the  underground  rail- 
road in  the  city,  the  overshadowing  villany  of  politics  and  finance  was  directly 
traceable  to  the  manipulation  of  the  city's  street  railways.  The  city  had  granted 
franchises  for  the  operation  of  various  surface  car  lines.  The  only  motive 
power  of  these  roads  in  the  beginning  was  that  of  horse,  but  as  the  city's 
population  grew  and  as  traffic  increased,  other  modes  of  locomotion  were  in- 
troduced. The  cable  system  was  installed  to  operate  the  cars  along  the  city's 
principal  thoroughfares,  and  with  this  installation  began  a  most  amazing 
series  of  public  frauds  and  deceptions.  In  the  first  place,  the  franchise  for 
the  operation  of  this  road  through  the  city's  principal  thoroughfares  was  ob- 
tained from  the  municipal  assembly  through  fraud  and  collusion,  and  the 
disclosure  of  the  bribery  of  municipal  assemblymen  was  one  of  the  scandals 
that  shocked  the  community.  The  bribery  was  pronounced  and  the  bidding 
for  the  votes  of  the  municipal  assemblymen  was  almost  committed  openly, 
so  bold  were  the  seekers  of  the  franchise. 

After  franchises  had  been  issued  for  most  of  the  surface  railways,  the 
plan  was  conceived  to  consolidate  all  the  roads  and  operate  them  as  one  com- 
pany. Authority  for  this  combination  was  obtained  on  the  pretext  that  the 
public  would  benefit  through  universal  transfers  and  through  economies  in 
operation.  A  series  of  financial  speculations  followed  this  consolidation.  The 
capitalization  of  the  consolidated  roads  was  multiplied  and  stocks  and  bonds 
issued  to  the  tune  of  a  quarter  of  a  billion  dollars.  The  manipulation  was 
carried  to  such  an  extent  that  the  market  quotation  of  the  stock  of  this  over- 
burdened financial  bubble  was  two  hundred  and  fifty  dollars  a  share.  The 
public  had  been  dragged  into  the  speculation  through  newspaper  misrepreA 

1 02 


:r 


sentafion,  and  when  the  pyramid  had  reached  its  highest  point  and  could  go 
no  further,  the  bubble  burst. 

The  public  held  the  bag  and  it  was  found  that  the  principal  manipulator 
of  'this  financial  coup  owned  less  than  two  per  cent,  of  the  stock  of  the  com- 
pany. He  was  one  of  the  city's  "leading"  citizens,  directed  the  destinies  op 
the  political  organizations  of  the  city,  dictated  the  selection  of  judges  for  the 
highest  bench,  and  in  general  was  of  such  financial  and  political  power  that 
he  was  able  to  conclude  his  swindling  operations  with  worthless  railroad 
securities  without  the  slightest  inconvenience.  The  courts  in  fact  aided  the 
swindle,  and  when  the  consolidated  company  became  bankrupt,  the  court  con- 
veniently broke  up  the  consolidation  and  restored  the  company  to  its  integral 
parts.  In  this  way,  the  net  result  of  the  entire  manipulation  was  that  the 
public  was  robbed  of  several  hundred  million  dollars  through  stock  manipula- 
tion  and  the  city  was  defrauded  out  of  a  large  part  of  its  income  from  its- 
franchise.  The  return  to  the  city  treasury  from  the  profits  of  this  franchise 
should  have  provided  sufficient  to  pay  a  large  part  of  the  administrative  cost 
of  government.  The  only  result  from  the  operation  of  these  street  railway 
franchises  was,  beside  the  wholesale  plunder  of  the  people,  the  enrichment  of 
those  financeers  and  politicians  who  were  influental  enough  to  secure  the  fran- 
chise favors.  Not  only  did  this  leading  railway  operator  profit  personally 
to  the  extent  of  fifty  million  dollars  (leaving  twenty-five  million  at  the  time 
of  his  death),  but  the  financial  group  interested  with  him  benefited  to  the  ex- 
tent of  many  millions  besides. 

The  details  of  this  gigantic  swindle  were  well  known  to  the  people  for 
several  years  before  the  city's  financial  disaster,  the  bankruptcy  of  the  con- 
solidated company  having  occasioned  considerable  hardship  among  them.  Not 
only  did  they  lose  their  small  savings  which  they  had  invested  in  the  securities 
of  this  railway  consolidation,  but  they  were  compelled,  after  the  consolidated 
company  was  disintegrated,  to  pay  double  and  triple  fares  to  ride  from  one 
part  of  the  city  to  another.  In  order  to  successfully  weave  their  crooked 
financial  fabric,  it  was  necessary  that  such  crimes  as  the  falsification  of  the 
company's  books,  the  bribery  of  court  witnesses,  and  the  perpetration  of  other 
crimes  equally  as  flagrant  be  overlooked  by  those  in  responsible  public  au- 
thority. It  was  necessary,  for  instance,  that  the  city's  prosecuting  attorney 
be  won  over  by  the  stock  manipulators  so  that  the  books  could  be  falsified 
and  perjury  suborned  without  retributive  punishment. 

When  the  details  of  these  crimes  were  disclosed  about  the  time  of  the 
railway's  bankruptcy,  the  prosecuting  attorney  was  found  to  be  of  a  friendly 
nature.  The  railroad  through  its  agents  had  succeeded  in  punishing  at- 
torneys who  had  the  temerity  to  sue  on  behalf  of  clients  injured  by  its 
cars.  It  actually  succeeded  in  disbarring  some  of  these  attorneys  by 
subornation  of  witnesses.  It  was  not  until  the  friendly  prosecuting  attorney 
left  office,  that  the  full  details  of  the  company's  crimes  were  made  known, 
but  the  crimes  by  this  time  were  outlawed  under  the  statute  and  could  not 
be  prosecuted. 

Such  in  brief  is  the  story  of  the  wrong  inflicted  on  the  people  of  the 
Great  City  through  the  abandonment  of  the  city's  franchises  to  private  in- 
dividuals for  their  own  profit.     The  same  story  of  the  city's  financial  injury 

103 


rtf 


1! 


> 


■  V  ' 


to  the  profit  of  those  influential  citizens  to  which  it  awarded  its  public  fran- 
chises, is  true  in  connection  with  other  public  utilities,  such  as  gas,  electric 
light  and  telephone.  At  the  time  of  the  city's  financial  collapse  it  was  actually 
paying  five  million  dollars  a  year  to  the  lighting  trust,  created  on  city  fran- 
chises for  the  construction  of  underground  conduits  and  the  laying  of  gas 
mains.  The  electric  combination  was  formed  a  score  of  years  before  the 
city's  bankruptcy  and  was  based  on  the  right  extended  to  a  small  company 
to  lay  conduits  for  the  reception  of  electric  wires.  Under  the  terms  of  the 
franchises,  the  city  was  to  derive  all  the  profits,  after  ten  per  cent,  was  paid 
on  the  stock  of  the  conduit  company,  but  up  to  the  time  of  the  city's  in- 
solvency it  had  actually  received  not  one  dollar  under  this  contract.  The  city 
had  proven  at  the  time  of  its  solvency  that  it  had  been  defrauded  out  of  three 
million,  two  hundred  thousand  dollars,  and  it  also  claimed  that  the  total  sum 
due  under  this  franchise  was  approximately  fifteen  million  dollars,  the  profits 
of  the  company  having  greatly  exceeded  ten  per  cent,  since  the  franchise  was 
issued.  These  profits  were  concealed  through  false  bookkeeping,  but  in  spite 
of  this  fact,  the  city  was  able  to  prove  an  actual  fraud  of  the  sum  mentioned. 

At  the  time  of  the  city's  collapse,  the  electric  light  companies  were  cap- 
italized at  a  total  of  one  hundred  and  fifty  million  dollars,  of  which  fifty  mil- 
lion dollars  was  water;  that  is,  the  capital  on  which  dividends  were  paid,  was 
inflated  that  amount.  The  profits  of  these  electric  franchises  were  so  enor- 
mous that  the  companies  were  finally  acquired  by  the  richest  man  in  the  world 
who  had  monopolised  the  gas  and  oil  works  of  various  communities.  He  ob- 
tained control  not  only  of  electric  companies,  but  also  of  the  gas  companies 
and  of  the  city's  elevated  railroad  system.  It  was  through  this  elevated  system 
that  other  large  profits  were  made,  and  until  the  time  that  a  franchise  tax 
was  created  by  the  state  legislature,  the  profits  of  this  elevated  system  went 
exclusively  to  those  who  controlled  the  franchise.  This  franchise  was  granted 
for  a  term  of  999  years,  and  when  the  first  underground  railroad  was  built 
in  the  city,  a  guarantee  of  seven  per  cent,  income  was  extended  to  the  owners 
of  the  elevated  railroad  company.  The  underground  railroad  was  consolidated 
with  the  elevated  system,  and  together  they  produced  large  revenue  for  private 
individuals. 

The  gas  and  electric  companies  were  controlled  by  the  same  financial 
interests  at  the  time  the  city  became  bankrupt.  The  gas  companies  had  been 
acquired  by  the  world's  richest  man  many  years  before  the  city's  safety  became 
imperilled.  The  history  of  the  franchises  of  these  companies  is  of  the  same 
general  character  as  that  of  the  street  railway  companies,  the  city's  return 
being  merely  nominal,  the  profits  going  almost  entirely  to  those  to  whom  the 
franchises  were  granted.  Under  these  franchises,  the  gas  companies  supplied 
an  inferior  quality  of  gas  to  the  general  public  at  prices  greatly  in  excess  of 
what  they  should  have  been.  The  inferior  quality  of  gas  resulted  in  the  "ac- 
cidental" death  in  winter  of  many  poor  persons  who  were  poisoned  by  the 
carbon-oxide  in  the  gas,  which  was  overcharged  with  water,  and  which  ex- 
tinguished itself  when  pressure  in  the  gas  pipes  was  withdrawn.  The  public 
was  compelled  to  pay  as  much  as  $2.50  a  thousand  cubic  feet  of  gas  up  to 
within  ten  years  of  the  city's  bankruptcy.  The  rate  was  eighty  cents  per 
thousand  cubic  feet  at  the  time  the  city  became  financially  involved,  the  re- 

104 


duction  having  been  compelled  by  legislative  act  following  the  discovery  that 
the  cost  of  manufacturing  and  distributing  gas  was  far  less  than  claimed  by 
the  company  whose  capital  had  been  vastly  inflated  to  conceal  actual  profits. 
The  same  story  of  franchise  wealth  and  city  impoverishment  is  obtained 
from  the  telephone  company  which  enjoyod  exclusive  conduit  franchise 
privileges  for  many  years.  The  people  were  charged  lofty  prices  for  tele- 
phone service,  the  profits  of  the  company  being  enormous.  It  was  charged, 
prior  to  the  city's  bankruptcy,  that  a  total  of  twenty  million  dollars  was  due 
the  city  under  the  terms  of  the  telephone  franchise.  This  franchise  was 
awarded  a  the  same  time  that  the  electric  light  privilege  was  granted  and 
under  the  same  general  terms;  that  the  city's  income  should  be  all  over  a 
profit  of  ten  per  cent.  As  in  the  case  of  the  electric  light  companies,  the 
accountings  to  the  city  were  false  and  no  profit  accrued  except  to  the  holders 
of  telephone  stock.  The  public,  however,  was  compelled  to  pay  several  times 
more  than  the  rate  in  other  cities  for  telephone  service.  The  rate  was  grad- 
uated from  eight  cents  a  call  in  a  local  zone  to  three  cents  a  call  on  an  ex- 
tensive contract,  the  rate  out  of  town  being  higher.  In  most  other  cities 
a  fiat  rate  was  paid  for  continuous  service,  no  charge  being  made  for  indi- 
vidual calls.  In  these  cities,  calls  could  be  made  from  any  telephone  station 
within  the  city  limits  without  extra  charge,  the  annual  rate  covering  the  entire 
service. 

NO  SUCH  ARRANGEMENT  WAS  POSSIBLE  IN  THE  GREAT 
CITY  UNDER  THE  CONDITIONS  OF  FINANCIAL  AND  POLITICAL 
CONTROL  THAT  EXISTED  FOR  SO  MANY  YEARS,  THE  DEMAND 
FOR  SUCH  AN  ARRANGEMENT  HAVING  GROWN  INCESSANTLY. 
THE  DEMAND,  HOWEVER,  WAS  NOT  ACCEDED  TO,  IN  SPITE  OF 
THE  FACT  THAT  IT  WAS  UNIVERSALLY  KNOWN  THAT  THE 
PROFITS  FROM  TELEPHONE  OPERATION  WERE  ENORMOUS, 
EXCEEDING  TEN  MILLION  DOLLARS  A  YEAR  FOR  THE  FORTUN- 
ATE STOCKHOLDERS  OF  THE  TELEPHONE  COMPANY.  THESE 
PROFITS  WERE  BASED  SOLELY  ON  THE  FRANCHISE  PRIVILEGE 
EXTENDED  BY  THE  CITY,  THE  PUBLIC  GETTING  NOTH- 
ING EXCEPT  THE  FRANCHISE  TAX  IMPOSED  DURING  THE  LAST 
TEN  YEARS  OF  THE  CITY'S  SOLVENCY.  THIS  FRANCHISE  TAX 
WAS  OFFSET  BY  THE  PAYMENT  OF  A  QUARTER  OF  A  MILLION 
DOLLARS  A  YEAR  FOR  TELEPHONE  SERVICE  IN  PUBLIC  OF- 
FICES, THIS  SERVICE  BEING  FURNISHED  GRATIS  IN  EVERY 
OTHER  CITY  OF  SIZE  IN  THE  WORLD. 


» 


n 


rl 


105 


H 


il! 


t1t3 


DOLLARS 
J  SALE,  U 


WHAT  DOES  THIS  MEAN  FOR  THE  FUTURE  OF  NEW  YORK? 

NEW  YORK  Cin  MUST  RECOVER  THE 
^..  PROFITS  ON  PUBLIC  FRANCHISES  IN  ORDER 
TO  RESTORE  THE  VALUE  OF  REAL  ESTATE 


<^ 


An  Op«n  UttM*  by  tlM  PiiMlslMr  ^  TMs  NcwspapM- 

Te  the  OMnbcrrsf  th*  Ciiy  Econoray  |  Wfort,   It  fan«l«a  •   •• 
^•M|:uc  ant  \o  all  Uipay«rv«n4  1  economy   tm  ^^-~ 
rciitp«)r«n  not  rcprt4caw4  ia  tbto  J 
•rcuiMtMO^  ~ 


HEW  YOBKCirrS  GAS  AND  ELEC- 
TRIC UGHT  fllLLS  INCREASED 


Ik 


$1,055,012.60  IN  FOUR  YEARS 


Vim,- 

a'Year— Qectrie  tight  BiBsHave  iMreasei  43% 
in  Spite  of  the  Fact  TM  Abont  Nioe-teodis  of  City  Streets 
fire  Uhnuated  b|  Gas. 


ligT  kNDTHER  DOlUR  OFl»RPOIiATE  STOCK  BONDS  SHOULD  BE  ISSUED  BY  THE  CnY 

OH*   HUNCHtB  MILLJOM  OOLLAM     TW  <rtrl  AMNUAlJ  •»"  -"  HUM"  TT"-*^*-'-         •*  »_^jt  ■     ■ 

-:zzr:Lzz:'Lz:'jz.'::t::.A  pn'S  bonds  for  subwat  m  water  totaujib  $i90.00fl,00H 


«»<■■«  »«  tan  nukH  w  N€-  Varit  C>>  NOT  AN01 
DOILAII  SHOUtO  BS  AOOtO  TO  THE  C1TV5  0£«T 
MOT  ANOTUtR  BOLIA*  txrCNDCQ  FO«  fU»J,IC 
rkOVCMCNTS  KXC£IT  OUT  OF  AMNUAL  ADMINIJ 
TIV6  ruNBS  ^OT  ANOTHE*  •OLU«»  Ol"  CO»»^ 
•ONDS  SHOOCB  BE  ISSUES  BV  TME  CITY  OF  Hr 

Ttut  ii«w«p*i>cr  hM  kt«n  «rv>«(  (•  •«•**  Pte^ 
B«w  IW  av'v  4tb*  KcvmwUMd     t*.t«  uv4«v  ** 
citr'i  <U<  MU(T  ac  •«<.«<<     Eiltw  -to  «^ 

ilTURMY.  JtM«/t«A'»H 

'HOVrWttl  NEW  YORK 

BE  FINANCED  FOR  THE 


CANNOT  SE  SOLD  UNDER  PRESENT  FINANCIAL  CONDITIONSl 


will  bt  «tol«  t»«<i^M«  •'  <u  bMA  iqr  MbwAy  •'M  wcMr  1 


d  Has -(tie  Greed  of  fTie  Financial  Ring 
1      and  (he  Persqfial  Profits  of  the 
^  «^'-   Real  Estate  Sharks  Biimted  Then 


»CI     ll-  ..,,-..,1  H«"<  %■  •"•'  HOOODDOOOwfi  *"«  -^  ~»; 


ih*>rlaA  b*  ^«»4  MM  ui  tare*. 


[LiEmrTQRXBESQLOTOTHE 


MCED  FOR  THE         -V  Heal  Estate  Sharks  Blinded  Them    "--  ISLroT  wmS  aVa  pkiii  t 

NEXT  FIVE  TEARS?     ^    *•  *«  ««''5  •»  "e*  ^•^?'  tfi!™^  S^^S  •,.L.5"nL. , 
^rV_  «*— B.^.. p....  H.--.,^*^ «,««-««.:-•    V^  OF  THE  SUBWAY  DEAL? 


iMvirm  tod  iciMtii  ram 


m^MttiblMM, 


•  A«f  V  MTUftHAft.  ^W«i^a^l 


fMsWMUtWM 


What  the  Author  of  this  Book  Said  of  the  Financial  Condition 
Of  New  York  City  in  KLEIN'S  WEEKLY  NEWS 


106 


CHAPTER  XV 


THE  CITY'S  MILLIONS  WERE  WASTED  AND  ITS  DEPEND- 
ENTS   IMPROPERLY    TREATED    IN    THE    HOSPITAL, 
CHARITIES,  AND  CORRECTIONAL  DEPARTMENTS 

The  city  provided  generously  for  its  sick,  for  those  in  charitable  want, 
and  it  also  spent  liberally  for  the  correctional  needs  of  its  people.  Its 
appropriation  for  these  purposes  for  the  year  preceding  the  city's  insolvency 
was  more  than  eight  million  dollars,  half  of  which  was  for  the  purposes  of 
public  charity.  These  appropriations  were  solely  for  administrative  expense, 
and  did  not  include  expenditures  for  new  hospitals,  new  correctional  institu- 
tions and  for  quarters  for  the  city's  dependent  poor  under  the  jurisdiction  of 
the  Department  of  Charities. 

The  city  spent  an  average  of  three  million  dollars  a  year  for  these  extra 
purposes,  the  total  expenditures  of  the  three  departments  being  approximately 
eleven  million  dollars  a  year.  The  city  had  charitable  institutions  in  all 
boroughs;  it  had  a  farm  colony  for  dependent  poor  and  it  was  spending  four 
million  dollars  for  a  new  retreat  for  tuberculosis  patients.  This  hospital  was 
to  accommodate  one  thousand  patients,  at  an  average  cost  of  four  thousand 
dollars  for  each  patient.  This  was  more  than  twice  the  average  cost  per  bed 
in  a  similar  institution  conducted  by  the  city,  and  the  disclosure  of  the 
lavishness  of  this  institution  was  followed  by  a  modification  of  the  plans  for  its 
construction.  It  was  designed  to  cover  several  acres  of  ground  and  to  be 
composed  of  a  dozen  buildings  constructed  of  granite  and  marble  to  occupy 
the  most  exclusive  section  in  the  city's  Island  Borough.  This  sumptuous 
retreat  was  solely  for  the  city's  tuberculosis  patients,  and  it  was  nearing 
completion  when  the  city  became  bankrupt.  The  contract  for  construction 
was  awarded  to  a  favored  contractor  and  all  expenditures  were  made  by  the 
architect  specially  selected  for  this  undertaking.  At  the  rate  the  city  was 
providing  for  its  consumptives  in  this  institution,  the  total  cost  for  the 
accommodations  of  the  city's  tuberculosis  victims  in  the  city  would  have 
approximated  fifty  million  dollars. 

There  were  many  hundreds  of  employees  on  the  payrolls  of  the  Charities 
Department,  many  of  whom  were  only  rated  as  orderlies,  with  small  pay, 
while  others  were  classed  in  higher  grades.  There  were  more  employees  iii 
this  department  than  in  any  other  branch  of  the  city's  service  with  the 
exception  of  the  police  and  fire  departments,  and  the  control  of  the  department 
was  a  valuable  asset  to  politics.  In  all,  about  four  thousand  names  were 
carried  on  the  city's  payroll  in  this  department,  which  had  jurisdiction  over 
several  hospitals  as  well  as  institutions  of  different  character  providing  for 
the  needs  of  city  dependents. 

107 


I 


I 


I 


■NhT] 


M 


if! 


'ifii> 


The  control  of  the  city's  lodging  house  was  also  lodged  with  the  charities 
department,  which  had  more  direct  contact  with  the  city's  poor  than  any  other 
administrative  bureau.  Contracts  for  the  provision  of  various  city  institutions 
under  the  jurisdiction  of  this  department  were  let  each  year  by  the  head  of 
the  departments,  and  on  more  than  one  occasion  it  was  found  that  the  city 
paid  unwarranted  prices  for  some  of  the  foodstuffs  provided.  It  is  needless 
to  recall  the  specific  details  of  extravagance  in  this  direction,  because  they 
are  on  a  par  with  those  of  the  city's  hospital  department,  which  will  be  told 
later.  The  waste  of  city  funds  for  these  expenditures  in  both  departments  is 
about  the  same. 

In  the  charities  department  there  is  a  bureau  for  dependent  children  which 

has  jurisdiction  over  funds   provided  by  the  courts  in  abandonment   cases. 

This  bureau  also  had  jurisdiction  over  children  abandoned  by  their  parents, 

and  under  the  law  the  parent  must  support  these  children.     A  few  years  before 

the  city's  collapse,  an  investigation  of  the  accounts  of  this  department  was 

made,  and  a  shortage  of  sixty-four  thousand  dollars  was  found,  covering  a 

period  of  three  years.     Receipts  for  only  fifteen  thousand  dollars  were  found 

where  the  total  funds  of  the  bureau  were  twenty-nine  thousand  dollars,  no 

balance  being  discovered.     It  was  also  shown  that  this  bureau  had  spent 

money  supposedly  for  the  relief  of  persons  in  distress,  and  that  in  but  a  single 

•instance  was  a  report  made  of  the  needs  of  the  person  who  received  assistance. 

No  investigation  was  made  in  all  the  other  cases  where  money  was  paid  out 

through  this  bureau. 

The  city  also  spent  about  five  million  dollars  a  year  for  dependent  charity 

in  private  institutions.  This  money  was  distributed  by  the  city's  finance  depart- 
ment under  general  supervision  of  the  head  of  the  charities  department.  A 
few  years  prior  to  the  city's  collapse,  the  city's  financial  officer  charged  that 
the  money  was  distributed  to  sectarian  institutions  without  proper  accounting, 
and  it  was  also  charged  that  the  city's  funds  thus  provided  to  these  institutions 
were  improperly  used.  The  funds,  however,  were  still  being  spent  in  the  same 
manner,  when  the  bankruptcy  of  the  city  was  announced.  The  city's  inmates 
in  private  institutions  numbered  25,000. 

There  were  frequent  complaints  of  the  mistreatment  of  patients  in  the 
city's  charitable  institutions,  and  of  the  inferior  quality  of  food  provided. 
These  complaints  were  investigated  from  time  to  time  and  substantiated, 
but  little  improvement  resulted.  Those  accused  were  always  able  to  shift 
the  burden  of  blame  or  deny  responsibility,  and  the  complaints  were  usually 

ignored. 

The  city  had  under  the  jurisdiction  of  its  hospital  department  at  least 
a  dozen  institutions  scattered  throughout  the  city,  which  received  approx- 
imately three  million  dollars  a  year  for  maintenance.  This  was  also  in 
addition  to  the  construction  cost  of  buildings  under  the  jurisdiction  of  this 
department,  the  average  expenditure  for  this  purpose  being  approximately  two 
million  dollars  a  year.  At  the  time  of  the  city's  collapse,^  it  was  erecting  a 
new  hospital  to  occupy  two  square  blocks,  and  to  exceed  in  size  any  similar 
institution  in  the  world.  The  cost  of  this  new  construction  was  estimated  at 
twelve  million  dollars,  and  it  was  only  partly  completed  when  the  bankruptcy 

occurred. 

108 


There  was  gross  mismanagement  in  the  affairs  of  this  department  from 
the  viewpoint  of  the  city's  interest.  Contracts  for  various  hospital  buildings 
were  let,  but  only  in  rare  instances  did  the  contractors  comply  with  the  terms 
of  their  contract.  The  city  had  under  construction  a  wing  of  one  of  its  hos- 
pitals, which  was  undertaken  eight  years  before  the  city's  failure.  The  con- 
tractor was  five  hundred  and  eighty  days  over  the  specified  time  in  which  the 
building  was  to  have  been  finished.  The  penalty  for  each  day's  delay  was  fifty 
dollars.  No  penalty  was  ever  exacted,  and  the  construction  work  lagged  in 
an  unconscionable  manner.  Another  contract  was  four  hundred  and  fifty 
overdue,  and  still  another  contract  for  two  pavilions  of  the  new  hospital  was 
a  full  year  overdo.  There  was  a  penalty  for  each  day's  delay  under  each  of 
these  contracts,  but  in  neither  of  them  was  the  penalty  enforced,  in  spite  of 
the  fact  that  the  city's  architect  protested  that  the  contractor's  delay  was 
unwarranted. 

This  was  the  general  story  of  the  construction  of  the  various  hospital 
buildings,  and  though  the  city  never  prosecuted  the  contractor  for  penalties 
for  delay  under  its  contracts,  the  city  was  usually  sued  by  contractors  when 
the  delay  was  caused  by  the  city's  own  officials.  All  these  hospital  structures 
were  erected  at  large  cost,  the  average  for  each  contract  being  about  four 
hundred  thousand  dollars. 

In  supplying  the  hospital  patients  with  nourishment,  the  city  was  grossly 
overcharged  by  the  contractors,  who  supplied  inferior  grades  of  foodstuffs 
and  meat.  The  contract  for  the  furnishing  of  lamb  at  the  city's  hospitals  a 
few  years  before  the  city's  failure  is  typical  of  how  the  city  was  treated  by 
the  food  contractors  in  this  department  and  in  the  department  of  public 
charities.  One-eighth  of  the  meat  provided  was  fat  and  was  paid  for  at  the 
rate  per  pound  of  meat.  This  fat,  of  course,  made  a  deficiency  in  the  total 
amount  provided,  and  caused  a  shortage  in  this  particular  meat  in  the 
hospitals. 

The  city  also  bought  from  private  ice  dealers  and  was  cheated  on  each 
pound  of  ice  supplied.  A  test  made  by  the  city's  investigating  body,  a  few 
years  before  the  city's  bankruptcy,  showed  that  the  shortage  of  ice  for  which 
the  city  was  charged  was  as  much  as  twenty  pounds  on  a  single  cake  of  ice, 
weighing  a  hundred  pounds.  The  ice  was  stored  in  a  warm  cellar  where 
steam  pipes  passed  and  where  the  meltage  was  nearly  fifty  per  cent,  a  day. 
The  hospital  also  purchased  artificial  ice  and  the  shortage  in  deliveries  was 
on  a  par  with  that  of  natural  ice.  Ice  delivered  to  the  male  training  school 
for  nurses  was  found  to  be  fifty  per  cent,  short  in  weight,  and  that  delivered 
at  the  hospital,  supposedly  in  cakes  weighing  three  hundred  and  twenty 
pounds  each,  were  forty  pounds  short.  The  daily  shortage  of  ice  delivered 
to  the  female  training  school  was  nine  hundred  dollars,  or  one-third  of  the 
entire  order. 

The  hospital  bureau  of  the  city  was  also  allowed  half  a  million  dollars 
for  the  purchase  of  supplies  each  year,  and  an  investigation  showed  that 
supplies  were  purchased  not  for  the  interest  of  the  hospitals,  but  for  the 
purpose  of  providing  profits  to  favorite  outsiders.  One  woman  who  was 
credited  with  being  a  soap  manufacturer  was  paid  six  cents  a  pound  for  a 
certain  brand  of  soap  which  was  sold  to  private  individuals  for  four  cents 
a  pound. 

109 


I 


» 


I 


I 


The  hospital  department  also  paid  six  and  three-quarter  cents  a  quart  for 
milk  which  was  supplied  to  private  hospitals  at  four  and  three-quarter  cents. 
The  specifications  of  the  milk  contract  called  for  four  per  cent,  butter  and 
twelve  and  a  half  per  cent,  solids  in  the  milk,  which  provided  a  nutritive 
grade  of  fluid.  The  city's  investigating  body  which  tested  the  quality  of  the 
milk  found  it  of  inferior  grade  and  not  within  the  specifications  of  the  con- 
tract. This  quality  of  milk,  however,  had  been  accepted  by  the  hospital 
division  for  many  years.  The  city  was  overcharged  from  one  and  a  half 
cents  to  two  cents  on  every  quart  of  milk  supplied  to  the  hospitals,  the  total 
su()ply  being  750,000  quarts  a  year.  The  better  grade  of  milk  delivered  to 
the  hospitals  was  used  by  the  hospital  employees,  the  inferior  quality  being 
supplied  to  patients  who  were  supposed  to  exist  on  milk  diets. 

An  operating  table  used  by  the  hospital  sold  to  private  individuals  for 
$166,  cost  the  hospitals  $180.  An  observation  stand  for  patients  purchased 
by  one  of  the  hospitals  was  accepted  larger  than  required  and  the  city  paid 
for  rebuilding  the  instrument  for  use.  The  city's  investigators  also  found 
that  in  the  purchase  of  rolls  and  bread  for  the  hospital  patients,  the  city  was 
overcharged  $2,225  in  one  year. 

The  city  was  overcharged  on  coal,  payment  being  made  on  a  tonnage 
basis  instead  of  on  a  basis  of  thermal  unit  or  on  the  basis  of  heat  produced. 
Defects  in  the  hospital  plant  made  it  necessary  to  use  twice  the  amount  of 
coal  that  would  have  been  used  in  a  well  equipped  engineroom. 

The  cost  of  fodder  for  horses  was  above  that  charged  to  private  individ- 
uals and  in  the  purchase  of  ambulances  the  city  was  also  overcharged. 
Private  hospitals  purchased  the  same  ambulances  for  which  the  city  paid  $700 
at  fifty  dollars  less,  and  in  two  years  it  was  discovered  the  city  paid  $6,100 
for  repairs  to  sixteen  ambulances,  which  was  more  than  53  per  cent,  of  the 
total  cost  of  these  vehicles.  A  private  hospital  during  the  same  period  paid 
seventy  dollars  for  the  repair  of  two  ambulances. 

The  number  of  employees  in  the  hospital  division  was  almost  as  large 
as  that  of  the  charities  division,  and  an  investigation  of  the  character  of  the 
orderlies  and  laboring  force  in  the  various  institutions  was  found  to  be  of 
a  low  grade.  The  laboring  force  was  changed  continuously,  half  of  them 
being  replaced  each  month.  The  per  capita  cost  of  patients  in  the  various 
city  hospitals  was  from  $1.60  to  $1.83  a  day,  while  the  report  made  by  the 
head  of  the  various  hospital  institutions  gave  the  figure  as  $1.41  to  $1.58  a 
day.  The  number  of  patients  in  the  hospital  report  was  misleading,  and  it 
was  also  discovered  that  some  patients  were  kept  for  months  in  the  institu- 
tions in  order  that  they  might  be  provided  with  comfortable  living  at  the 
expense  of  the  city. 

A  few  years  before  the  city's  failure,  the  proposition  was  advanced  that 
a  farm  be  selected  for  the  erection  of  a  home  for  the  city's  inebriates. 
This  proposition  was  taken  up  by  the  Mayor,  who  expressed  a  sympathetic 
feeling  toward  those  of  weak  character,  and  a  board  was  actually  appointed 
to  select  a  site  for  an  inebriate  farm  colony.  Various  sites  were  authorized 
and  the  city  finally  selected  a  tract  of  five  hundred  acres  outside  the  city 
limits.  The  farm  cost  the  city  a  quarter  of  a  million  dollars  and  the  institu- 
tion was  but  slightly  used  after  it  was  established.  In  fact  the  average  cost 
of  patients  in  the  institution  based  on  the  cost  of  maintenance  and  the  interest 

110 


QUTHRIE,  BANCS  *  vyiM  QfND!P:RR»««, 


charge  on  the  investment^  was  about  five  thousand  dollars  a  year  for  each 
patient. 

The  city's  money  was  wasted  in  these  and  in  other  ways  in  these  two 
branches  of  the  city  government,  and  it  was  also  wasted  in  about  the  same 
proportion  in  the  city's  correctional  department.  This  department  had  juris- 
diction over  the  city  prisons,  and  when  the  city  became  financially  embar- 
rassed, work  was  stopped  and  the  correctional  institution  erected  on  a  small 
island  in  the  river,  at  a  cost  of  $1,200,000.  The  head  of  the  correctional 
department  was  also  anxious  to  begin  the  construction  of  a  two-million-dollar 
structure  on  another  small  island  belonging  to  the  city,  also  for  correctional 
purposes,  and  he  also  requested  three-quarters  of  a  million  dollars  to  con- 
struct a  building  for  a  woman's  court  and  jail. 

It  was  through  the  control  of  this  correctional  department  that  political 
influence  was  exerted  to  aid  lawbreakers  under  detention  for  criminal  offenses. 
The  keepers  in  the  various  correctional  institutions  were  political  appointees 
and  through  them  those  confined  in  the  institutions  were  comforted.  Contracts 
awarded  through  this  department  were  extended  as  favors  to  influential  politi- 
cians and  their  representatives,  and  the  plumbing  work  of  the  department  was 
done  without  competitive  bidding  by  the  representative  of  a  powerful  political 
organization.  The  purchase  of  provisions  by  this  department  was  conducted 
on  about  the  same  basis  as  that  of  the  hospital  and  charities  departments  and 
the  loss  to  the  city  was  relatively  the  same.  In  all,  the  city  was  loser  to  the 
extent  of  several  million  dollars  a  year  through  these  three  departments,  their 
mismanagement  continuing  until  the  final  ruin  of  the  city. 


4. 


1» 


} 


III 


!,■  ■■•! 


112 


CHAPTER  XVI 

EDUCATION  IN  THE  PUBLIC  SCHOOLS  WAS  MISDIRECT- 
ED AND   MILLIONS   OF  DOLLARS  WERE  WASTED 
BY  "BUREAUCRATIC  SCHOOL  GOVERNMENT" 

"What  ails  the  schools  ?"  is  the  question  that  was  asked  for  several  years 
prior  to  the  city's  financial  collapse  because  of  the  vast  sums  of  money  spent 
annually  on  the  school  system  and  because  of  the  unsatisfactory  results  so 
far  as  the  intelligence  and  understanding  of  the  children  were  concerned. 
During  the  years  when  the  annual  appropriation  for  school  purposes  ex- 
ceeded thirty  million  dollars,  parents  complained  continually  that  the  advan- 
tages of  the  school  were  in  no  way  commensurate  with  the  amount  of  money 
expended,  and  raised  by  taxation.  Children  were  no  longer  equipped  in  the 
fundamentals  of  a  common  school  education  and  they  seemed  to  lack  the 
concentration  of  pupils  of  previous  years. 

The  year  preceding  the  city's  collapse  the  appropriation  for  public  school 
purposes  was  thirty-nine  miUion  dollars,  in  addition  to  which  the  city  spent 
about  five  million  dollars  for  new  school-houses.  The  entire  cost  of  the 
school  equipment,  including  land,  buildings  and  furnishings,  was  estimated 
at  one  hundred  and  forty  million  dollars  at  the  time  the  city  became  bankrupt 
The  city  had  acquired  parcels  of  ground  in  various  districts  for  school  pur- 
poses, but  so  rashly  were  the  sites  selected  that  at  the  time  of  the  city's  failure 
the  Department  of  Education  held  fourteen  million  dollars  of  vacant  real 
estate  for  which  it  had  no  use,  the  property  being  located  in  places  where 
school  buildings  could  not  be  serviceable  and  where  need  for  them  did  not 
exist.  These  parcels  were  acquired  from  various  persons  who  owned  them 
and  who,  largely  through  influence  or  friendship,  or  other  more  potent  reason, 
were  able  to  dispose  of  them  to  the  city  at  prices  in  excess  of  their  real  value. 

For  many  years  the  number  of  schoolchildren  who  were  taught  on  "part 
time,"  that  is,  who  attended  school  half  day  instead  of  during  morning  and 
afternoon,  grew  until  the  city's  insolvency  was  announced.  At  that  time 
more  than  eighty  thousand  children  or  one-ninth  of  the  entire  school  attend- 
ance were  part-time  pupils.  This  part-time  system  was  severely  condemned 
during  the  years  in  which  their  number  grew,  and  it  was  under  the  pretext 
of  providing  "a  seat  for  every  child  in  school"  that  the  city's  money  was  ap- 
propriated in  bulk  to  the  Educational  Department  for  building  purposes.  It 
was  this  lavishness  of  appropriation  that  resulted  in  the  acquisition  of  school 
sites  to  the  amount  of  fourteen  million  dollars  that  were  unavailable  for 
school  use. 

The  annual  appropriation  for  the  educational  department  was  about  one- 

113 


I' 


1 

^ 

r 


fourth  of  the  entire  sum  devoted  to  city  administration.  At  the  time  of  the 
city's  collapse  the  schools  were  attended  by  more  than  seven  hundred  thou- 
sand pupils  (the  per  capita  cost  of  education  being  about  fifty  dollars  a  year), 
and  this  number  was  continually  increased  just  like  the  number  of  school 
buildings  because  members  of  the  Board  of  Education  were  insistent  in  their 
demand  of  "a  seat  for  every  child."  This  slogan  was  used  to  extract  large 
sums  of  money  for  educational  purposes  so-called,  under  the  spur  of  which 
new  phases  of  "education"  were  constantly  introduced  at  large  cost  to  the 
taxpayers.  Children  were  taught  subjects  in  which  they  had  no  interest  and 
zvhich  operated  against  their  understanding  of  the  elemental  subjects  of 
reading,  writing  and  arithmetic.  It  was  charged  that  children  who  gradu- 
ated from  the  elementary  schools  were  deficient  in  the  use  of  the  English 
language  and  the  knowledge  of  arithmetic,  geography  and  history,  but  that 
they  knew  something  of  dancing,  of  foreign  history,  of  nature  study  and  of 
elementary  physical  science. 

During  the  last  ten  years  of  the  city's  solvency,  when  the  budgets  for  school 
purposes  continually  increased,  the  schools  were  presided  over  by  a  superin- 
tendent and  twenty-three  associates  who  were  responsible  for  school  admin- 
istration in  as  many  school  districts.  Each  school  was  in  charge  of  a  prin- 
cipal or  of  two  principals,  who  complained  that  their  time  was  mostly  occupied 
in  preparing  voluminous  statistics  for  the  superintendent  and  that  they  had 
no  time  and  were  not  permitted  to  exercise  their  own  discretion  with  regard 
to  the  course  of  school  studies.  During  this  period  of  more  than  ten  years 
a  terror  had  grown  up  among  young  women  graduating  from  the  city  college 
into  the  ranks  of  pedagogues  in  the  public  schools,  because  of  the  severity 
of  the  technical  examination.  Each  prospective  teacher  was  made  to  under- 
stand that  the  course  of  teaching  was  all  mapped  out  for  her,  that  no 
initiative  was  required  and  that  strict  adherence  to  the  course  mapped  out 
was  imperative.  As  a  result  of  this  discipline,  initiative  was  finally  banished 
from  the  public  schools.  The  school  course  was  lengthened  two  years,  and 
the  result  was  that  the  over-age  pupils  in  the  schools  numbered  about  one 
hundred  and  sixty  thousand  at  the  time  of  the  city's  failure.  The  arbitrari- 
ness of  the  school  superintendent  was  claimed  to  be  responsible  for  this  back- 
wardness in  the  pupils  because  of  the  numerous  special  studies  added  to  the 
school  curriculum.  These  were  termed  "fads  and  fanciest'  and  were  strongly 
objected  to  by  the  parents  of  school  children,  who  charged  that  the  minds  of 
the  pupils  were  improperly  developed. 

The  Board  of  Education  was  an  organization  by  itself  with  power  con- 
ferred by  the  legislature.  Though  the  city  appropriated  the  money  for  the 
administration  of  the  schools,  the  city's  officials  were  not  clothed  with  the 
authority  of  control  over  the  school  expenditures,  the  board  itself  having  sole 
supervision.  This  was  brought  about  through  a  campaign  of  misrepresenta- 
tion several  years  before  the  city's  failure  which  resulted  in  the  enactment  of 
a  law  placing  control  of  the  school  system  solely  in  the  hands  of  the  school 
superintendents.  This  superintendent  body  was  dominated  by  the  chief 
superintendent,  who,  as  previously  stated,  was  domineering  in  his  manage- 
ment of  the  schools.  The  campaign  also  resulted  in  the  control  of 
expenditures  of  the  Department  of  Education  for  new  buildings  and  for  sup- 
plies by  the  school  board  independent  of  the  city's  governing  body.     Under 

114 


the  act  creating  this  self-constituted  school  system  the  superintendent  of 
schools  was  made  chairman  of  the  Board  of  Examiners  which  conducts  ex- 
aminations for  the  licensing  of  teachers  and  it  lodged  authority  with  the  chief 
superintendent  for  the  renewal  or  discontinuance  of  these  teachers'  licenses. 

It  also  made  the  chief  superintendent  chairman  of  the  Board  of  Super- 
intendents which  nominates  teachers  for  appointments,  promotions  and  trans- 
fers, and  it  also  lodged  power  with  the  chief  superintendent  to  assign  deputy 
superintendents  to  any  district  he  chose,  making  it  possible  for  him  to  humili- 
ate or  exalt  any  of  them.  The  control  was  also  lodged  with  the  chief  super- 
intendent for  the  licensing  of  principals  after  they  had  been  selected,  placing 
what  amounts  to  a  veto  power  in  the  hands  of  the  chief  superintendent  over 
the  selection.  The  chief  superintendent  also  was  clothed  with  the  authority 
to  dismiss  clerks,  stenographers  and  other  employees  in  the  office  of  the  vari- 
ous district  superintendents,  and  he  was  also  empowered  to  prepare  all  blank 
forms  for  report  submitted  by  the  various  district  superintendents.  He  was 
given  the  power  to  select  truant  officers  and  to  enforce  the  compulsory  edu- 
cation law,  and  also  to  direct  the  management  of  all  truant  schools  and  train- 
ing schools  for  teachers.  He  is  also  a  member  of  the  Board  of  Superin- 
tendents which  retires  school  teachers  on  pensions  and  he  alone  can  recom- 
mend the  retirement.  Altogether,  the  powers  of  the  superintendent  were 
dictatorial,  and  it  was  during  this  period  when  he  reigned  supreme,  that  the 
educational  system  was  overloaded  to  such  an  extent  that  its  efficiency  dimin- 
ished and  the  usefulness  of  school  teachers  depreciated  coincident  with  the 
increase  of  expenditures  for  teaching,  for  new  buildings  and  for  school 
equipment. 

Under  the  demand  of  "a  seat  for  every  child,"  the  public  money  was 
lavished  on  new  buildings,  and  it  was  not  until  the  final  collapse  of  the  city 
that  it  was  realized  that  part  time  in  the  schools  during  the  first  three  years 
was  an  advantage  over  the  full  school  day.  Children  under  eight  years  of 
age,  it  was  agreed,  were  not  mentally  or  physically  strong  enough  to  be  sub- 
jected to  full  day  sessions.  It  was  then  realized  that  school-houses  were 
erected  and  new  plots  acquired  under  a  false  impulse.  The  Education  De- 
partment was  anxious  to  dispose  of  its  unused  vacant  land,  but  under  the 
law  the  city  was  obliged  to  retain  every  parcel  of  property  acquired. 

The  over-centralization  of  authority  in  the  hands  of  the  chief  superintendent 
deprived  the  various  principals  and  district  superintendents  of  whatever  in- 
itiative they  possessed,  and  the  autocracy  of  the  chief  superintendent  made  it 
advisable  that  no  suggestions  looking  to  improve  the  school  method  be  offered. 
Such  was  the  supreme  authority  lodged  with  the  chief  superintendent,  that 
he  even  dominated  the  school  board  in  the  selection  of  sites  for  new  schools, 
and  that  both  the  district  superintendents  and  principals  submerged  their  own 
educational  convictions  for  those  of  the  chief  superintendent.  The  demand 
of  the  Board  of  Education  for  increased  budget  annually  was  climaxed  a  few 
years  before  the  city's  collapse,  by  the  increase  of  several  million  dollars  in 
the  budget  to  "equalize"  the  salaries  of  men  and  women  teachers.  The  women 
had  gone  to  the  legislature,  and  through  astute  and  persistent  agitation 
induced  the  legislature  to  enact  a  law  bringing  the  pay  of  the  women  on  a 
par  with  that  of  the  men.  This  act  resulted  in  increasing  the  school  budget 
about  three  million  dollars  a  year,  and  added  several  points  to  the  annual  tax 

115 


i'> 


rate.  In  return  for  the  services  rendered  by  their  chief  agitator  for  "equal 
pay,"  the  women  teachers  contributed  a  fund  of  a  hundred  thousand  dollars 
for  the  expenses  of  the  equal  pay  campaign  and  for  a  gift  to  the  campaign 
manager.  This  young  woman  was  awarded  a  bonus  of  many  thousands  of 
dollars  for  her  successful  labor. 

Toward  the  end  of  the  period  of  the  city's  solvency  various  investigations 
of  the  school  system  and  management  were  conducted.  The  question  of  part 
time  was  taken  up  as  a  separate  subject  for  investigation,  and  a  report  was 
prepared  condemning  the  practice  of  teaching  children  only  two  or  three 
hours  a  day  in  the  public  schools.  This  condemnation,  however,  in  no  way 
affected  the  practice,  which  was  continued  because  of  the  lack  of  class  room 
and  because  of  the  general  acceptance  of  the  belief  that  children  of  tender 
age  were  over-strained  by  staying  more  than  a  fezv  hours  a  day  in  school. 
The  mayor  of  the  city  himself,  just  prior  to  the  city's  failure,  declared  the 
school  system  was  entirely  wrong.  He  said  that  children  were  taught  too 
many  subjects,  too  little  of  each,  and  that  their  heads  were  jammed  with  super- 
ficial knowledge  and  with  no  accurate  information.  He  said  they  were  over' 
educated  on  unessential  matters  and  under-educated  on  essential  things. 

Another  phase  of  the  investigation  of  the  school  board  had  to  do  with 
the  purchase  of  buildings  and  school  sites;  another  inquired  into  expenditure 
of  city  money  through  the  school  board  for  supplies.  Another  phase  was 
devoted  to  defects  in  the  educational  system,  most  of  which  were  pointed  out 
in  brief  by  the  mayor  and  by  other  persons  acquainted  with  the  superficial 
character  of  the  school  course.  Another  phase  of  the  investigation  was  de- 
voted to  the  general  character  of  the  school  buildings  from  the  point  of  view 
of  their  safety  in  case  of  fire  and  the  reconstruction  of  several  of  the  buildings 
was  recommended.  The  committee  also  reported  that  in  few  buildings  was 
there  a  proper  ventilating  system  and  that  most  of  them  lacked  adequate  fire 
protection.  Another  report  treated  of  the  general  method  of  instructions  in 
the  schools,  and  this  was  severely  condemned  by  an  expert  who  had  spent 
months  studying  the  school  course  and  the  manner  in  which  it  was  imfjttsed 
on  the  pupils.  The  reports  charged  that  the  "arm  of  education  was  paralyzed" 
because  of  the  "bureaucratic"  system  in  the  public  schools. 

All  this  school  inefUciency,  it  was  pointed  out,  was  responsible  for  the 
lack  of  coordination  in  the  operation  of  the  school  system  and  also  in  the 
overloading  of  the  curriculum  to  the  injury  of  the  pupils.  The  quality  of 
teaching  in  the  public  schools  was  condemned  because  of  the  lack  of  initiative 
among  teachers. 

The  Board  of  Education  engaged  janitors  of  the  various  schools  and 
paid  them  a  lump  sum  of  money  out  of  which  they  were  expected  to  hire 
subordinate  help  to  keep  the  schools  properly  cleaned.  This  method  of  placing 
responsibility  on  school  janitors  for  the  proper  maintenance  and  care  of 
school  buildings  was  criticized  in  one  of  the  reports  which  charged  that  in 
one  year  206  firemen  were  employed  for  a  total  of  2,274  months  of  labor. 
The  report  declared  that  only  153  firemen  were  needed,  and  that  a  saving  of 
$15,000  could  have  been  effected  in  one  year.  In  some  instances  janitors  were 
paid  as  high  as  ten  thousand  dollars  a  year  and  in  turn  they  paid  their  subordi- 
nates so  meagerly  that  most  of  the  money  paid  by  the  school  board  for  proper 

116 


janitorial  services  was  retained  by  the  janitor  himself,  the  service  in  the 
schools  being  neglected. 

There  was  frequent  complaint  of  course  in  connection  with  the  repair  of 
school  buildings  and  one  contractor  charged  that  his  bill  for  $2,200  for  school 
repair  was  "held  up,"  until  he  paid  six  hundred  dollars  commission  to  an  in- 
spector of  the  building  bureau  of  the  school  department.  This  same  inspector, 
it  was  charged,  had  received  one  thousand  dollars  from  another  contractor 
who  built  a  new  school  for  the  city.  It  was  charged  that  other  inspectors 
had  also  been  paid  for  their  "friendly  services"  in  passing  school  buildings 
as  being  properly  constructed  when  they  were  defective. 

The  city  purchased  a  farm  of  107  acres  for  a  parental  school  in  an  out- 
lying borough  within  a  few  miles  of  another  farm  of  about  the  same  acreage 
which  was  owned  by  the  city  as  a  training  ground  for  horses.  There  was 
no  immediate  need  for  this  parcel  of  property  for  the  educational  department, 
but  this  was  only  another  illustration  of  how  the  city's  money  was  wasted  for 
so-called  public  need.  The  schools  were  controlled  as  in  an  iron  grip  by 
those  who  were  at  the  head  of  the  system,  and  each  step  for  reform  in  the 
method  of  teaching  and  of  the  school  curriculum,  as  well  as  in  the  business 
administration,  was  resisted  and  constantly  opposed.  The  control  of  the  school 
board  was  at  all  times  a  point  of  political  contention,  and  during  the  admin- 
istration just  prior  to  the  city's  collapse  the  forces  representing  the  niayor 
secured  control.  This  came  toward  the  end  of  a  period  of  stormy  efforts  to 
capture  the  board  membership  by  the  mayor.  It  teas  charged  that  the  board 
was  an  arrogant  body  and  that  it,  as  zvell  as  the  chief  superintendent  of 
schools,  was  responsible  for  the  misdirection  of  the  school  system. 

As  a  result  of  the  steady  increase  in  school  appropriations  and  in  the 
continuous  demand  for  more  funds,  the  taxpayers  were  roused  to  an  interest 
in  school  affairs  and  the  conclusion  of  the  various  investigations  left  them 
fairly  well  informed  on  school  matters.  The  determination  was  reached  to 
extend  the  part-time  course  to  all  children  during  the  first  three  years  of  the 
school  period  in  order  that  the  cost  of  the  administration  would  be  reduced 
and  the  health  of  the  children  benefited.  This  economy,  however,  was  not 
proposed  until  the  inevitable  failure  of  the  city  was  at  hand  and  its  purpose 
was  not  carried  out. 


M 


% 


117 


"^ 


S*^  Jc    «    "    C    "    rt  1? 

5  |fS  *  «  -  t  °-is 


w     *?    I^    *■ 

o  o   .- 
"2  «=  o 


^  S-o 

•• 


=^  ^^  >•  E  H 


JJ  2  5  =.|- i^-s 

5  8^1:5  I  i 


r^  •*  ** 
§-« 

^£  g  a, 
E « r  3 

o.g -1: 

.woo 


118 


en 


CO 

E 
o 


^3 

u 

a 
o 

u 


CHAPTER  XVII 

THE  CITY'S  MONEY  WAS  WASTED  AND  THE  INTEREST 

OF  ITS  CITIZENS  OTHERWISE  DAMAGED  THROUGH 

IMPROPER     STREET     PAVING    AND    FAULTY 

SEWER    CONSTRUCTION 

For  many  years  prior  to  the  city's  collapse,  it  had  wasted  a  large  part 
of  the  people's  money  through  the  laying  of  asphalt  pavements  throughout 
the  city.  The  city  spent  approximately  fifty  million  dollars  during  the  twenty 
years  preceding  its  insolvency  and  the  estimated  waste  based  on  specific  cal- 
culation is  approximately  twenty  million  dollars.  A  comparison  was  made 
of  the  cost  of  laying  asphalt  in  several  of  the  large  cities,  and  it  was  found 
that  the  cost  in  the  bankrupt  city  at  that  time  averaged  more  than  twice 
that  paid  in  each  of  four  other  cities,  all  of  them  within  two  hundred  tniles. 
It  was  estimated  during  the  period  of  three  years  covered  by  this  investiga- 
tion that  the  city  had  wasted  two  million  dollars  on  street  paving.  This  excess 
was  accounted  for  as  the  price  of  the  monopoly  in  asphalt  paving,  which 
held  the  city  at  that  time,  and  which  continued  over  a  score  of  years.  The 
excess  paid  by  the  city  averaged  about  two  million  dollars  a  year.  Some  of 
this  money  was  assessed  directly  on  the  people  and  the  rest  of  it  was  pro- 
vided for  out  of  bonds  issued  to  run  for  long  periods.  One  set  of  pavement 
bonds,  drawing  seven  per  cent,  interest,  was  issued  more  than  seventy  years 
prior  to  the  time  of  the  city's  failure,  and  was  still  outstanding  when  the  city 
became  bankrupt. 

The  condition  of  the  city's  pavements  became  acute  six  or  seven  years 
before  its  failure,  in  spite  of  the  fact  that  several  million  dollars  had  been 
spent  each  year  to  keep  the  pavements  in  repair  and  to  lay  new  pavements 
where  needed.  The  city  had  in  office  as  the  head  of  one  of  its  boroughs, 
an  official  who  was  professionally  engaged  in  politics  and  who  was  in  public 
office  for  personal  benefit.  He  had  squandered  the  pavement  fund  for  the 
benefit  of  the  asphalt  monopoly  and  of  his  own  followers,  and  so  impassable 
to  vehicular  traffic  did  the  streets  become  because  of  neglect,  that  the  busi- 
ness of  trades  people  was  damaged  and  the  city  suffered  serious  injury  to  its 
costly  fire  apparatus  which  were  damaged  by  the  broken  pavements.  This 
official  was  subsequently  removed  from  office  because  of  general  maladminis- 
tration, and  one  of  the  main  causes  of  his  removal  was  the  wasted  street 
paving  funds.  During  a  period  of  three  years  under  this  official,  the  city 
was  sued  138  times  because  of  its  failure  to  properly  maintain  its  pave- 
ments, the  damages  claimed  totalling  more  than  one  million  dollars. 

There  were  other  pavements  besides  asphalt  on  the  city's  streets,  and 
the  same  general  waste  was  incurred  with  each  style  of  pavement.  The  city 
had  laborers  employed  at  fair  salaries  to  keep  the  stone  pavements  in  good 

119 


;i 


» 
i 


i* 


Tffll 


order  and  to  replace  them  whenever  they  were  moved  to  reach  the  gas  and 
electric  light  pipes  and  water  mains  underneath.  In  the  district  presided 
over  by  this  political  office  holder,  the  pay-roll  of  this  repair  gang  averaged 
three  thousand  dollars  a  week.  No  adequate  record  was  kept  of  the  sums 
paid  to  these  laborers,  and  when  it  was  totalled  up  it  was  found  that  wages 
had  been  paid  from  trust  funds  deposited  by  contractors  to  guarantee  that 
pavements  would  be  properly  restored  after  they  were  torn  up.  In  this  way, 
the  money  of  these  depositors  was  misused,  and  the  city  was  unable  to  keep 
an  adequate  account  of  the  amount  of  money  paid  for  repair  of  highways 
by  this  official.  The  trust  funds,  of  course,  were  finally  replaced  through 
special  appropriations  by  the  city's  governing  power,  but  this  mishandling  of 
the  city's  money  and  the  money  of  private  contractors  hastened  to  bring 
about  the  city's  financial  downfall. 

There  was  another  form  of  pavement  known  as  wood  block  which  was 
used  during  the  administration  of  this  official,  and  in  each  case  the  contract 
price  was  exceeded  by  the  final  payment.  The  average  excess  in  ten  specific 
contracts  was  fourteen  per  cent,  above  the  contract  price.  The  bid  of  the 
paving  company  was  accepted  as  the  lowest  of  all  bids  offered,  but  in  each 
instance  the  contractor  was  paid  in  excess  of  the  bid.  The  total  excess  on 
seventeen  contracts  was  fifty  thousand  dollars,  the  gross  amount  paid  being 
$553'000.  In  most  cases,  the  excess  payments  on  the  contracts  were  illegal, 
the  law  limiting  the  excess  to  five  per  cent.  The  contracts  specified  that  no 
claims  for  additional  work  should  exceed  that  margin. 

There  were  other  evidences  of  irregularity  in  the  bureau  which  con- 
trolled street  pavements,  and  where  an  average  of  eight  hundred  men  were 
employed  in  repairing  the  streets.  It  was  found  that  some  of  those  on  the 
pay-roll  were  never  engaged  as  street  laborers,  one  of  them  being  employed 
as  night  watchman  in  a  theater.  Others  who  were  on  the  pay-roll  were  bar- 
tenders, fish  dealers,  and  these  were  supposed  to  have  performed  the  work 
of  cartmen  for  the  city.  One  of  those  on  the  pay-roll  was  an  expressman 
who  hired  a  boy  to  drive  the  cart  for  him,  the  boy  receiving  but  a  small 
portion  of  the  wages  paid  to  the  expressman.  Another  highway  employee 
who  parcelled  out  his  services  was  a  stableman  who  engaged  a  friend  to 
drive  a  cart  for  him.  Another  who  served  the  city  in  the  same  vicarious 
manner  was  a  teamster  who  acknowledged  under  oath  that  he  never  drove  a 
cart  himself.  There  were  others  on  the  pay-roll  of  the  Highway  Bureau, 
who  served  in  the  same  way  through  substitutes,  but  their  names  were 
carried  on  the  pay-roll  and  they  received  the  full  amount  due  a  regular 
employee.  It  was  also  learned  that  most  of  those  on  the  Highway  pay-roll 
were  members  of  various  political  organizations,  their  employment  being 
merely  political  and  not  to  satisfy  the  needs  of  the  city. 

An  investigation  of  contracts  for  street  paving  disclosed  that  the  speci- 
fications were  so  drawn  that  a  monopoly  was  cheated  and  that  the  city  had  no 
adequate  redress  from  contractors  where  pavements  were  improperly  laid. 
Specifications  in  most  of  the  contracts  were  ambiguous  and  failed  to  provide 
for  the  use  of  suitable  material;  the  testimony  of  experts  on  these  contracts 
proved  conclusively  that  they  were  drawn  so  that  contractors  and  not  the 
city  should  benefit.     The  testimony  of  one  of  these  experts  is  as  follows: 

120 


"The  specifications  for  asphalt  pavement  are  inadequate  and  indefinite,  and 
they  distinctly  require  methods  of  preparing  foundation  and  laying  asphalt 
surface  which  are  now  recognized  by  the  best  authorities  to  be  wrong  and  to 
result  in  inferior  work.  The  best  interests  of  the  city  require  that  these 
specifications  shall  be  revised,  and  I  regard  the  matter  as  so  important  that 
I  recommend  that  no  more  contracts  be  entered  into  under  them  " 

The  waste  of  public  money  in  the  pavement  of  the  city  streets  was 
probably  more  general  than  in  any  other  direction.  The  streets  were  con- 
tinuously paved  and  repaired  and  the  people  were  being  assessed  directly 
or  through  the  issuance  of  bonds,  for  this  work.  The  political  mismanage- 
ment of  the  city  found  its  best  excuse  for  waste  in  this  direction,  because 
by  thi?  means  it  was  able  to  provide  employment  for  those  of  the  laboring 
class  who  were  out  of  work.  As  already  shown,  income  was  orovided  for 
many  who  were  employed  in  private  capacities  and  who  had  sufficient  political 
"pull"  to  place  their  names  on  the  city's  pay-roll. 

The  city  paid  monopoly  prices  for  asphalt  pavement  for  a  score  of  years 
before  the  final  bankruptcy.  It  paid  an  average  of  $3.20  per  square  yard  for 
new  asphalt  surface  while  the  prevailing  price  for  the  same  pavement  was 
a  dollar  a  square  yard  in  another  borough.  The  total  cost  of  laying  and 
maintaining  asphalt  provided  by  this  monopoly  averaged  $7.56  a  square  yard, 
though  the  original  contract  price,  including  a  fifteen-year  maintenance  guar- 
antee, was  $3.94  per  square  yard.  The  asphalt  monopoly  in  the  city  was 
based  on  the  control  of  the  asphalt  beds  from  which  the  composition  was 
shipped  to  various  parts  of  the  country.  In  the  city  refined  asphalt  was 
quoted  at  $41  a  ton  as  against  $17  a  ton  in  foreign  ports,  and  in  a  period  of 
eight  years  the  city  paid  $480,000  more  for  the  same  quantity  of  asphalt 
than  could  be  purchased  abroad. 

The  property  owners  of  the  city  were  doubly  injured  through  the  mis- 
management of  the  pavement  finances,  the  delay  in  transmitting  assessments 
against  property  after  pavement  had  been  laid  being  deliberate  and  for  specu- 
lative purposes.  At  one  time  the  city  had  outstanding  assessments  totalling 
twenty  million  dollars  against  property  owners  where  pavements  had  been 
laid,  but  these  assessments  were  not  filed  with  the  final  assessing  body,  be- 
cause the  real  estate  sharpers  who  owned  these  parcels  of  property  were 
anxious  to  dispose  of  them  so  that  the  pavement  debt  would  not  become  a  lien 
against  the  property  until  after  it  had  passed  out  of  their  hands.  In  this  way 
those  who  purchased  property  from  these  land  developers  and  who  invested 
their  money  on  a  legitimate  basis,  found  that  they  were  victimized  by  the 
land  sharpers  and  the  city's  own  employes  who  conspired  to  impose  the 
pavement  debts  on  the  innocent  land  purchasers.  This  practice  became  so 
general  prior  to  the  city's  collapse,  that  an  investigating  body  found  that  law- 
yers who  made  a  specialty  of  condemnation  practice,  profited  largely  through 
this  interruption  and  delay  of  the  city's  business;  the  transfer  of  the  assess- 
ments to  the  final  assessing  body,  was  "held  up"  through  their  instrumentality 
This  same  interruption  took  place  with  regard  to  assessments  for  sewer 
improvements,  and  similar  imposition  was  practised  against  those  who  pur- 
chased property  immediately  after  sewer  improvements  had  been  made,  where 

121 


i, 


I 


t' 


■  ^ 


the  assessments  were  still  "held  up"  only  to  be  filed  as  a  lien  again  the 
property  after  it  had  been  acquired  by  the  new  owners. 

This  practice  became  so  general  and  so  damaging  to  innocent  purchasers 
of  property  who  learned  afterwards  that  they  had  been  victimized,  that 
an  end  was  finally  put  to  the  swindling  practices.  The  city  was  compelled  to 
register  all  its  improvement  assessments  promptly  thereafter,  but  the  con- 
dition of  the  real  estate  market  was  then  such  that  property  owners  were 
unable  to  dispose  of  their  property  at  even  the  value  of  the  assessment  on 
the  city's  tax  books. 

A  final  effort  was  made  to  improve  the  city's  pavement  and  to  economize 
in  public  expenditures  in  this  direction,  during  the  few  years  before  the  city 
became  insolvent.  Various  suggestions  for  the  construction  of  a  municipal 
repair  plant  were  proposed,  but  the  advantage  of  such  an  undertaking  was 
not  obtained  before  failure  overtook  the  city.  It  was  charged  also  during 
this  brief  period  of  three  years  when  pavement  improvements  were  under- 
taken, that  the  city  was  still  wasting  its  pavement  funds.  This  accusation 
was  made  after  an  award  of  a  contract  to  a  wood  block  paving  company  for 
$131,000.  A  bid  for  asphalt  pavement  over  the  same  area  was  only  $105,000. 
The  official  at  whom  the  accusation  of  extravagance  was  directed  declared 
that  the  wood  paving  block  was  more  desirable  for  the  locality  specified  in 
the  contract.  This  assertion,  however,  was  not  borne  out  by  a  walk  over 
the  pavement  in  summer  time,  when  the  tar  in  the  wood  block  stuck  to  the 
shoes  of  pedestrian  and  damaged  the  floor  coverings  of  homes  in  the  vicinity. 

The  people's  interests  financially  were  damaged  in  other  ways  in  the 
matter  of  street  pavements,  than  those  already  mentioned.  In  the  restoration 
of  pavements  by  the  railway  companies,  the  blocks  or  asphalt  were  usually 
restored  in  a  careless  or  improper  manner  resulting  in  serious  damage  to 
trucking.  Not  infrequently  were  the  wheels  of  wagons  and  the  tires  of 
automobiles  ripped  off  because  pavements  were  improperly  restored.  A 
commission  which  investigated  the  condition  of  the  city's  streets  within  a 
few  years  of  the  city's  failure,  reported  these  careless  repavements  and  also 
reported  the  fact  that  because  of  discrepancy  in  prices  the  city  was  over- 
charged two  million  six  hundred  thousand  dollars  in  a  few  years  on  the  cost 
of  pavement.  This  report  was  the  most  recent  from  which  figures  of  sub- 
stantial accuracy  were  obtainable. 

Another  channel  through  which  the  city's  money  was  wasted  was  in 
the  construction  of  sewers  at  a  total  cost  of  more  than  $50,000,000.  Investiga- 
tion showed  that  the  city  paid  exorbitantly  not  only  for  construction,  but  for 
repair  and  maintenance,  and  that  the  waste  of,  public  funds  was  relatively 
as  great  in  one  direction  as  in  another. 

The  city  had  some  trunk  sewers  whose  diameters  exceeded  fifteen  feet, 
and  which  were  constructed  under  contract  at  a  cost  of  millions  of  dollars. 
The  property  owners  in  the  district  through  which  these  sewers  ran  were 
assessed  for  all  sewer  construction  work,  the  city  at  large  paying  a  share  of 
the  cost  in  some  instances.  The  individual  assessment  on  some  of  the  prop- 
erty owners  actually  exceeded  the  value  of  the  property  on  which  the  assess- 
ments were  levied,  and  these  outrageous  charges  were  due  to  the  fact  that 

122 


the  contracts  for  sewer  construction  were  let  not  to  the  lowest,  most  com- 
petent  bidder,  but  to  the  most  unworthy  and  incompetent  contractor. 

The  waste  to  the  city  on  sewer  construction  included  not  only  the  exces- 
sive charges  of  the  sewer  contractor,  but  also  the  effect  of  improper  con- 
struction. In  many  cases  after  the  sewers  were  finished  and  accepted  by 
the  city's  engineers  and  final  payments  made  to  the  contractor,  it  was  dis- 
covered that  the  sewers  were  faultily  built  and  repairs  were  actually  made 
almost  as  soon  as  they  were  finished.  Tjiere  were  numerous  instances  o 
improper  sewer  construction  only  some  of  which  will  be  cited.  In  one  of 
the  city's  boroughs,  a  contract  for  the  construction  of  a  trunk  sewer  was  let 
to  a  contractor  who  died  when  the  work  was  under  way.  His  wife  attempted 
to  finish  the  job  and  she  failed  on  the  contract,  which  was  turned  over  to 
another  contractor  who  used  thousands  of  barrels  of  cement  which  had  been 
condemned  by  the  federal  government.  The  contract  was  also  withdrawn 
from  this  contractor  and  turned  over  to  a  third  contractor,  who  finally  finished 
the  job  the  total  cost  of  the  construction  of  the  sewers  being  twtce  the  amount 
of  the  'original  contract.  The  second  contractor  sued  the  city  for  $100,000 
and  recovered  that  amount  damages. 

In  the  same  borough,  the  annual  cost  of  sewer  maintenance  was  approxi- 
mately $125,000.  This  sum  was  paid  to  laborers  who  cleaned  the  sewer 
basins,  and  an  authoritative  investigation  disclosed  the  fact  that  40  per  cent, 
of  this  money  was  wasted  each  year.  There  was  one  foreman  and  an 
assistant  foreman  in  each  "gang"  of  laborers  which  consisted  of  two  carts 
and  three  laborers.  Neither  the  foreman  nor  the  assistant  took  any  part 
whatever  in  the  actual  work  of  cleaning  the  sewer  basins,  except  that  they 
looked  on  while  the  basins  were  being  cleaned.  These  laborers  were  credited 
with  overtime  when  actually  no  overtime  existed,  the  purpose  of  the  extra 
credit  being  to  allow  them  time  off  to  attend  the  outing  of  a  political  organiza- 
tion. 

A  summary  of  the  report  of  the  city's  investigators  with  regard  to  the 
waste  of  the  city's  money  in  excess  payment  to  sewer  cleaners  estimates  that 
the  city's  total  loss  for  the  period  of  six  years  in  the  salary  account  alone  of 
sewer  laborers  was  $302,000.  The  summary  also  states  that  this  excess  pay- 
ment is  due  not  only  to  inefficiency  and  indifference  of  the  laboring  force,  but 
also  to  a  deliberate  desire  to  provide  employment  for  as  many  men  as  could 
possibly  be  placed  on  the  city's  pay-roll.  It  is  also  estimated  that  the  cost 
of  a  cubic  yard  of  material  removed  from  the  sewer  basins,  was  $3.11  as  com- 
pared with  $1.80  when  the  sewer  "gangs"  diligently  performed  their  work. 
Contracts  for  sewer  repairs  were  usually  let  to  favored  contractors  and 
the  investigation  showed  that  the  charges  for  repair  work  by  these  con- 
tractors was  from  25  to  100  per  cent,  more  than  a  reasonable  price.  One  of 
these  contractors  was  paid  $13  to  $14  per  linear  foot  for  sewer  pipes  when  a 
reasonable  price,  allowing  a  fair  profit,  would  have  been  $7.50  or  $8  a  foot. 
A  record  of  the  city's  sewer  bureaus  showed  that  while  in  one  borough  the 
cost  per  sewer  basin  for  cleaning  was  approximatively  $4.90,  in  another 
borough  the  cost  was  only  $1.80. 

In  another  borough,  the  city  spent  several  million  dollars  for  the  con- 
struction and  replacement  of  sewers  along  the  line  of  the  new  undergroimd 

123 


i^ 


:i 


^ 


railroad.  The  construction  was  of  such  a  faulty  nature,  that  the  sewers  be- 
gan to  overflow  and  property  owners  sued  the  city  for  consequent  damages. 
These  sewer  damage  claims  became  so  numerous  that  an  investigation  was 
determined  upon,  and  it  was  discovered  that  a  group  of  lawyers  had  instigated 
most  of  them.  Among  the  leaders  in  this  group  were  two  lawyers  who  were 
on  the  terms  of  friendliest  intimacy  with  one  of  the  judges  of  the  city's 
highest  court.  The  claims  against  the  city  aggregated  many  millions  of 
dollars,  and  more  than  $300,000  of  "damages"  had  been  paid  before  the 
extent  of  the  sewer  frauds  was  discovered.  Both  of  these  lawyers  who  were 
the  judge's  intimate  friends,  were  indicted  on  the  charge  of  grand  larceny,  and 
one  of  them  was  convicted  and  served  a  prison  term.  The  indictment  against 
the  other,  who  was  the  judge's  particular  crony,  was  never  pressed  for 
prosecution. 

The  story  of  the  city's  wrongs  in  the  matter  of  sezver  construction  would 
be  interminable  if  all  the  details  were  told.  Suffice  it  to  say  that  the  heads 
of  some  of  the  city's  sewer  bureaus  were  active  in  the  destruction  of  the 
city's  interest,  and  some  of  them  were  dismissed  from  time  to  time  after  an 
investigation.  One  sewer  superintendent  was  permitted  to  resign  in  deference 
to  the  wishes  of  one  of  the  city's  distinguished  jurists  after  voluminous 
charges  had  been  filed  against  him  for  malfeasance  in  office.  He  was  charged 
with  damaging  the  city's  interests  to  the  extent  of  many  thousands  of  dollars 
and  also  with  responsibility  for  false  charges  against  property  owners  who 
were  assessed  for  sewer  construction. 

In  view  of  the  continuous  failure  of  the  officials  charged  with  sewer  con- 
struction to  guard  the  interests  of  the  city  and  its  people,  the  financial  injury 
involved  in  the  construction  of  sewers  at  a  cost  of  $50,000,000  was  at  least 
$20,000,000.  The  reconstruction  of  sewers  to  the  amount  of  $25,000,000  was 
declared  to  be  imperative  at  the  time  the  city  became  bankrupt. 


124 


CHAPTER  XVIII 

THE  CITY'S  TENEMENTS  BRED  VICE  AND  CRIME  WHILE 

THE  FUNCTIONS  OF  ITS  TENEMENT  HOUSE  AND 

BUILDING    BUREAUS    WERE    NEGLECTED 

The  city's  interest  and  the  interest  of  its  builders  and  property  owners 
was  greatly  damaged  through  its  building  bureaus  and  through  its  depart- 
ment for  the  control  of  tenement  houses.  The  damage  was  as  serious  in  one 
department  as  in  the  other,  both  of  them  affecting  the  safety  and  the  health  of 
the  people.  The  Tenement  House  Department  was  created  mainly  to  insure 
the  construction  of  sanitary  homes  for  the  poor,  and  the  inefficiency  of  this 
department  was  a  particular  injury  to  the  people.  An  investigation  of  the 
building  bureaus  a  few  years  before  the  city's  financial  collapse  disclosed  how 
serious  was  the  mismanagement  of  this  branch  of  the  city  government.  The 
regulations  of  the  bureaus  in  each  of  the  city's  boroughs  were  enforceable 
through  the  medium  of  inspectors  selected  after  examination,  but  so  indifferent 
were  they  to  the  duties  of  their  office,  that  their  services  were  of  little  value. 

In  each  of  the  bureaus  there  was  an  emergency  fund  for  the  shoring  of 
"unsafe"  buildings,  and  under  the  pretext  that  emergencies  existed,  many 
thousands  of  dollars  were  paid  to  favored  contractors.  In  one  year  one  of 
these  contractors  received  $67,000,  and  in  another  year  he  collected  $38,000 
from  the  city  The  sequel  to  each  payment  was  found  on  the  books  of  the 
contractor,  which  disclosed  that  sums  of  money  ranging  from  $25  to  $1,000 
were  paid  to  inspectors  of  the  Building  Bureau.  These  inspectors  were 
charged  with  supervising  the  work  of  the  contractor  to  see  that  no  more 
work  than  was  necessary  under  the  emergency  order  was  done  and  that  pay- 
ment was  honestly  charged.  In  most  cases  the  property  owners  were  com- 
pelled to  pay  for  this  emergency  work  in  addition  to  payments  made  by  the 
city 

The  investigation  disclosed  that  the  only  system  of  checking  the  bills 
of  contractors  was  the  memoranda  of  work  contained  in  the  inspectors'  note- 
books These  note-books  were  unavailable  at  the  time  of  the  investigation 
on  the  explanation  that  they  were  the  private  property  of  the  inspectors. 
There  was  no  record  in  the  Building  Bureau  of  the  material  or  labor  fur- 
nished by  the  contractors  for  which  bills  were  rendered  and  for  which  pay- 
ment was  made. 

The  records  of  these  bureaus  were  so  inadequate  that  not  even  time 
sheets  of  the  inspectors'  service  were  kept.  The  records  showed  that  shorers 
were  paid  $4.00  and  riggers  $5.50  a  day,  but  the  testimony  of  one  of  the 

125 


I 


'1'   '1 


Wl\ 


superintendents  under  whom  these  men  worked  was  to  the  eflfect  that  he 
knew  no  distinction  between  shorers  and  riggers,  each  doing  the  same  class 
of  work. 

The  contractor  charged  for  the  services  of  watchmen  as  well  as  for 
shorers  and  riggers,  and  in  one  instance  the  charge  was  made  for  the  services 
of  eight  watchmen  where  there  was  only  forty-six  pieces  of  lumber  to  watch. 
In  another  instance  the  contractor  charged  for  twelve  days*  services  for  fore- 
men shorers  and  107  days  for  shorers  where  the  actual  shoring  done  was 
with  one  piece  of  lumber.  Another  specific  instance  of  overcharge  by  the 
contractor  was  for  the  rental  of  eight  lots  at  $50  a  month  each  for  fourteen 
months,  the  total  rental  charge  being  $5,600.  The  contractor's  own  records 
showed  that  he  paid  as  rental  for  these  lots  for  the  entire  period  only  $816. 

The  discretionary  power  exercised  by  the  heads  of  the  building  bureaus 
left  a  wide  margin  for  the  exercise  of  favoritism  on  their  part.  In  several 
instances  the  building  code  with  respect  to  construction  of  theatre  buildings 
was  violated  with  what  would  seem  to  be  the  consent  of  the  superintendent, 
and  in  two  cases  the  regulations  for  exits  in  the  event  of  fire  and  for  the 
proper  construction  of  courtyards,  were  deliberately  ignored  by  the  builders. 
In  neither  case  was  it  necessary  for  the  builder  to  remodel  his  construction 
to  comply  with  the  provisions  of  the  law.  The  superintendent  also  exercised 
wide  discretion  in  the  alteration  of  non-fireproof  hotels,  and  in  many  cases 
the  law  was  construed  directly  in  favor  of  the  hotel  proprietor.  In  one  in- 
stance, where  plans  were  filed  for  the  addition  of  another  story  for  a  non- 
fireproof  hotel,  the  plans  were  made  to  appear  that  the  addition  would  come 
within  the  height  prescribed  for  non-fireproof  buildings  The  building  was 
actually  raised  eighteen  feet  above  the  limit  prescribed  by  law,  and  no  viola- 
tion was  ever  placed  against  the  structure  in  the  Building  Bureau.  In  this 
particular  instance  it  was  testified  that  a  sum  of  money  was  paid  to  secure 
the  approval  of  the  Building  Bureau  to  these  plans. 

In  other  cases  it  was  found  that  the  superintendent  of  the  Building 
Bureau  approved  applications  for  the  alteration  of  buildings  in  violation  of 
the  code  and  that  such  alterations  produced  structures  wherein  the  lives  of 
the  inmates  were  placed  in  peril  of  fire  because  the  law  was  violated.  In 
one  case  two  buildings  were  added  to  an  old  non-fireprooi  hotel,  and  the 
only  egress  from  these  additional  buildings  was  through  the  non-fireproof 
structure.  There  were  alterations  of  a  similar  character  which  were  ap- 
proved by  the  superintendent  of  buildings  in  direct  violation  of  the  law  and 
to  the  peril  of  the  occupants  of  these  houses.  The  purpose  of  the  building 
<ode  was  to  insure  the  safety  of  the  people  through  the  proper  construction 
of  their  residences,  public  buildings  and  places  of  amusement. 

In  the  Building  Bureau  in  other  boroughs  violations  of  the  same  nature 
were  found  and  the  building  code  was  violated  in  the  same  glaring  manner. 
Buildings  were  erected  on  lots  in  contravention  of  the  law,  the  structures 
occupying  more  of  the  lot  than  prescribed  by  law;  in  other  instances  non- 
fireproof  structures  were  built  in  direct  defiance  of  the  law.  It  was  also  dis- 
covered in  one  of  the  bureaus  that  the  salaries  of  the  principal  subordinates 
were  so  split  that  the  salary  of  the  deputy  superintendent  was  actually  less 
than  that  of  his  two  subordinates.    This  was  by  prearrangement  in  order  to 

126 


provide  an  extra  position  in  the  bureau.  It  was  also  found  that  more  in- 
spectors were  employed  in  these  bureaus  than  were  needed  to  properly  per- 
form the  functions  required  by  law  and  that  the  service  rendered  was  not 
only  inadequate,  but  of  a  nature  designed  to  harm  the  public  interest  rather 
than  to  aid  it. 

Inspectors  were  appointed  mainly  for  political  reasons,  and  their  services 
were  on  a  par  with  other  appointments  for  similar  reasons.  The  badge  of 
office  of  a  building  inspector  was  frequently  used  for  blackmail  purposes  by 
those  who  were  in  no  wise  connected  with  the  bureau,  Sind  there  were  numer- 
ous complaints  by  contractors  who  erected  fire-escapes,  as  well  as  by  building 
contractors,  that  bribes  were  demanded  even  where  the  law  was  fully  ob- 
served in  fulfilling  the  contract. 

In  connection  with  the  control  of  this  department  for  political  purposes, 
repeated  attempts  were  made  by  those  of  political  influence  in  the  city  to 
amend  the  building  code  in  such  manner  that  would  bring  large  profit  to  a 
special  group  of  manufacturers  of  building  material.  These  efforts  were 
opposed  by  those  who  represented  rival  business  interests,  and  the  notoriety 
resulting  from  this  opposition  defeated  the  efforts  of  both  interests.  The 
abortive  attempt  to  amend  the  code  involved  the  city  in  claims  for  services 
aggregating  several  hundred  thousand  dollars  and  these  claims  were  still 
unpaid  at  the  time  of  the  city's  failure. 

During  the  administration  of  one  building  superintendent  a  safety  ele- 
vator clutch  in  which  the  superintendent  had  a  financial  interest  was  intro- 
duced, and  builders  were  advised  to  use  it.  The  profits  accruing  from 
the  forced  sale  of  this  safety  clutch  swelled  the  fortune  of  the  building 
superintendent.  The  blackmailing  of  builders  and  of  fire-escape  constructors 
became  so  general  at  one  period  that  exposure  was  threatened.  Charges  of 
graft  were  made  by  those  who  had  dealings  with  the  building  department, 
and  only  the  fear  of  retaliative  persecution  prevented  the  complete  exposure 
of  those  accused.  In  one  instance  a  building  inspector  used  the  letter  "M" 
to  indicate  what  he  considered  was  the  value  of  his  "services'*  in  O.  K.'ing 
a  construction  job.  He  compromised  by  saying  he  would  take  a  **D,'"  which 
in  the  parlance  of  the  grafting  inspector  meant  $500,  the  "M"  standing 
for  $1,000.  At  another  time  a  clerk  in  the  bureau  indicated  that  for  $10  he 
would  hasten  the  issuance  of  a  permit  for  the  erection  of  a  grandstand  during 
a  parade  event.  On  several  occasions  building  inspectors  were  arrested 
after  they  had  taken  marked  money  passed  to  them  as  bribes,  but  at  no  time 
did  the  exposures  assume  the  full  proportions  of  scandal,  because  of  fear 
and  of  the  complicity  of  contractors  with  the  building  inspectors. 

Conditions  in  the  Tenement  House  Department  were  on  a  par  with  those 
in  the  Building  Bureau,  though  less  was  heard  of  the  misconduct  of  the 
employees  in  this  department.  Accusations  were  frequent  that  the  depart- 
ment was  mismanaged,  and  that  the  functions  of  the  department  were  not 
fulfilled  because  of  the  failure  of  its  employees  to  perform  their  duty.  In 
fact,  the  condition  of  the  city's  tenements  at  the  time  of  the  city's  failure 
was  such  that  it  was  estimated  that  there  were  as  many  as  50,000  rooms  in 
tenement  houses  where  no  ray  of  light  penetrated.  There  were  at  that  time 
more  than  100,000  tenement  houses  in  the  city,  each  housing  an  average  of 

127 


t> 


100  persons.  Most  of  these  windowless  apartments  were  constructed  prior 
to  the  enactment  of  law  prohibiting  their  construction. 

Inspectors  in  the  Tenement  House  Department  on  more  than  one  occa- 
sion were  charged  with  the  same  form  of  misconduct  as  were  those  in  the 
Building  Bureau  An  investigation  conducted  only  a  few  years  before  the 
city's  failure  showed  that  tenement  inspectors  used  the  power  of  their  office 
to  induce  builders  to  employ  certain  subcontractors  on  their  buildings  and 
to  place  their  insurance  through  favored  insurance  brokers.  By  this  means 
the  inspectors  "earned"  extra  profits  from  their  position.  The  investigation 
disclosed  that  tenement  house  builders  were  held  back  in  their  work  when- 
ever they  failed  to  act  on  the  suggestions  of  the  inspector,  and  in  one  case, 
when  an  inspector  was  flatly  accused  by  a  builder  of  holding  up  his  work 
because  he  declined  to  engage  certain  subcontractors,  no  injury  to  the  ac- 
cused official  resulted,  though  the  complaint  was  made  directly  to  the  head 
of  the  tenement  house  department. 

A  report  by  an  unofficial  investigating  body  with  regard  to  the  enforce- 
ment of  the  tenement  house  law  showed  that  more  than  56,000  violations 
were  pending  against  tenement  houses  at  one  time,  and  that  most  of  these 
complaints  were  unacted  upon  for  years.  A  similar  situation  existed  with 
regard  to  the  work  of  the  city's  law  department  in  cases  where  violations 
were  reported.  At  the  time  of  the  investigation  more  than  16,000  complaints 
against  tenement  houses  were  unacted  upon  by  the  law  department. 

The  report  of  this  unofficial  investigating  body  showed  that  the  work  of 
the  department  was  carried  on  only  in  a  perfunctory  manner,  and  that  no 
serious  attention  was  paid  to  the  well-being  or  the  safety  of  those  who  lived 
in  tenement  houses,  the  department  having  jurisdiction  over  the  residences 
of  80  per  cent,  of  the  poor.  The  job  of  tenement  inspector  meant  merely 
that  the  person  who  carried  the  title  was  carried  on  the  city's  payroll  with- 
out any  particular  obligation  on  his  part  to  perform  the  duties  of  his  position. 

A  large  number  of  the  city's  tenement  houses  were  owned  by  estates  of 
great  wealth.  Some  of  these  houses  were  located  in  the  poorest  quarters  of 
the  city  where  the  most  unsanitary  conditions  prevailed.  Some  of  them  were 
owned  by  religious  corporations,  and  it  was  disclosed  at  one  time  that  not 
only  were  these  houses  in  a  most  unsanitary  condition,  but  that  the  lives  of 
the  tenants  were  endangered  because  of  improper  construction.  One  row  of 
tenement  houses  owned  by  a  charitable  institution  and  exempt  from  taxation 
was  in  such  filthy  condition  at  the  time  of  the  city's  failure  that  those  un- 
fortunate enough  to  be  compelled  to  live  on  the  premises  were  continuously 
ill.  The  death  rate  in  this  section  of  the  city  was  unusually  large  and  pov- 
erty was  pronounced.  These  houses  were  not  improved,  even  though  the 
new  law  affecting  tenement  houses  required  that  at  least  sanitation  and  safety 
from  fire  be  provided.  The  tenements  belonging  to  these  estates  were  fire- 
traps,  as  well  as  incubators  of  ill  health  and  breeders  of  vice  and  crime. 


128 


CHAPTER  XIX 

THE  CITY  PAID  TWICE  WHAT  IT  SHOULD  FOR  PRINT- 
ING   AND    STATIONERY    AND    IT    SPENT    $400,000     A 
YEAR  FOR  THE  REPAIR  OF  AUTOMOBILES  USED 
BY    CITY  OFFICIALS  —  ITS    PEDDLERS   WERE 
VICTIMIZED  ON  LICENSES 

Another  channel  through  which  the  city's  funds  were  largely  wasted 
was  the  purchase  of  stationery  supplies  for  various  city  departments  and  the 
payment  of  money  to  newspapers  and  other  publications  in  the  city,  for 
advertising  purposes,  on  the  recommendation  of  the  mayor  or  his  repre- 
sentative. A  few  years  before  the  city's  failure,  a  commission  was  ap- 
pointed to  estimate  the  total  loss  of  city  funds  through  this  source,  and  the 
report  of  this  commission  furnished  illuminating  data  for  the  people.  It 
showed  how  the  influence  of  the  newspapers  was  indirectly  purchased  through 
the  favor  of  city  advertising,  and  it  also  showed  how  several  hundred  thou- 
sand dollars  were  squandered  annually  for  printing  on  which  the  city  was 
grossly  overcharged.  The  city's  printing  bill  increased  250%  (to  $800,000  a 
year)  in  a  few  years,  during  which  time  the  mayor  of  the  city  was  solicitous 
for  the  support  of  the  local  newspapers  in  his  effort  to  build  up  a  personal 
political  following. 

Most  of  this  printing  was  ordered  by  the  various  department  heads  without 
competitive  bidding  and  on  direct  order  in  violation  of  the  city's  charter  which 
specified  that  no  contract  be  awarded  for  more  than  one  thousand  dollars 
without  competition.  During  that  same  period  the  city  purchased  from  this 
same  printing  concern  stationery  for  more  than  a  quarter  of  a  million  dollars, 
most  of  it  being  acquired  on  open  order  without  competition.  The  total 
amount  annually  expended  for  printing  and  stationery  up  to  a  few  years 
before  the  city's  failure  was  approximately  $1,150,000,  and  the  following  in- 
dicates how  some  of  this  stationery  was  purchased.  The  Health  Department, 
just  a  few  days  before  the  change  in  city  administration,  ordered  blank  books 
and  stationery  at  a  cost  of  many  thousands  of  dollars,  and  the  order  in  a 
single  day  provided  the  Department  with  as  much  stationery  as  it  could  use 
in  several  months.  The  order  called  for  cards,  blanks,  vouchers,  report  slips 
to  the  number  of  1,600,000,  separate  sheets,  all  of  which  were  requested  at 
the  expense  of  the  people,  without  competition. 

The  committee  which  investigated  the  public  extravagance  in  the  matter 
of  printing  and  stationery,  charged  plainly  that  the  city  had  been  overcharged 
half  a  million  dollars  a  year  on  its  printing,  stationery  and  advertising  con- 
tracts during  the  six  years  preceding.  It  showed  that  in  one  year  the  city 
paid  $840,000  for  advertising  in  various  newspapers,  of  which  a  quarter  of 

129 


fc 


a  milUon  dollars  was  paid  for  advertising  election  information.  These  adver- 
tisements, besides  being  inserted  in  the  prominent  daily  newspapers,  were 
also  mserted  in  inconspicuous  and  unknown  weekly  publications,  some  of 
which  were  started  solely  for  the  purpose  of  obtaining  this  city's  advertising 
through  influential  intermediaries.  At  one  time  twenty-three  of  these  publi- 
cations were  carried  on  the  city's  advertising  payroll  The  commission,  in 
its  report,  declared  that  $300,000  of  this  $840,000  of  advertising  should  have 
been  saved.  It  also  recommended  that  advertising  be  reduced  to  a  minimum. 
The  commission  also  reported  that  of  the  total  amount  expended  for 
printing  purposes  by  the  city  the  overcharge  was  approximately  fifty  per  cent, 
out  of  the  total  printing  bill  as  already  stated,  of  eight  hundred  thousand 
dollars  a  year.  The  committee,  in  its  report,  went  into  detail  to  show  what 
the  city  was  overcharged  in  printing,  and  it  showed  how  pages  of  composi- 
tion were  set  at  a  contract  cost  of  $4.50  a  page  for  which  the  city  actually 
paid  $9.65.  This  was  in  the  city's  own  special  publication,  consisting  of  1668 
pages,  the  total  overcharge  for  composition  alone  on  this  one  issue  beine 
$8,657. 

The  commission  also  reported  that  where  the  city  paid  $13.84  for  com- 
position per  page  for  a  great  many  pages,  the  same  work  could  have  been 
done  for  $3.30,  showing  an  overcharge  of  $10.54  per  page.  It  also  showed 
that  the  city  was  charged  $8.31  per  page  for  composition  covering  145  pages, 
and  that  the  actual  cost  of  this  composition  should  have  been  $2.10  per  page' 
It  also  showed  that  the  city  paid  $52,000  for  the  publication  of  a  special  real 
estate  supplement  containing  3696  pages,  and  that  the  overcharge  to  the  city 
alone  on  this  supplement  was  $29,161.  These  disclosures  of  public  waste  in 
tfie  city's  printing  and  supplies  were  followed  by  competition  in  printing  and 
m  the  purchase  of  stationery  supplies. 

For  many  years  city  printing  and  the  sale  of  stationery  to  the  city  was 
monopolized  by  a  single  firm  of  printers,  and  the  disclosure  resulted  in  the 
awarding  of  a  contract  to  a  rival  printer.  Supplies  had  been  purchased 
through  a  subsidiary  of  the  printing  firm  which  held  the  monopoly,  and 
during  this  entire  period  of  a  score  of  years  the  monopoly  averaged  more 
than  a  million  dollars  a  year  profit,  at  the  expense  of  the  city.  The  rival 
printer  who  obtained  the  contract  was  long  established  in  business,  and  reli- 
able. He  agreed  to  perform  the  same  service  as  that  rendered  by  the  other 
printer  for  one-half  the  price.  No  sooner  was  he  engaged  on  the  contract 
than  he  found  himself  harrassed  on  all  sides  by  various  city  departments 
which  complained  against  his  services.  This  badgering  by  public  officials 
was  incessant,  and  the  new  printer  found  that  the  money  due  him  from  the 
city  was  held  up  by  the  city's  financial  officer.  In  the  meantime  his  print 
shop  was  entirely  taken  up  with  city  work,  his  private  customers  were 
neglected,  and  he  was  unable  to  meet  the  expenses  of  his  plant  without 
some  of  the  money  which  the  city  owned  him.  Distracted  and  tortured  by 
this  condition,  the  printer  who  occupied  a  leading  position  in  his  trade  for 
a  quarter  of  a  century  became  desperate  and  ended  his  life  by  drowning  him- 
self in  a  well  on  his  own  property. 

It  was  not  until  this  happened  that  the  meanness  of  those  who  crippled 
him  was  spent  and  the  city  awakened  to  its  responsibility  in  the  matter.    It 

130 


was  ehen  too  late.  The  contract  was  reawarded  to  the  firm  which  had  en- 
joyed the  monopoly  and  the  graft  for  so  many  years,  and  at  the  tune  of  the 
city's  failure  this  same  establishment  was  the  beneficiary  of  all  the  city  print- 
ing. The  city  spent  one  million  dollars  a  year  for  printing  and  stationery. 
and  at  no  time  did  it  attempt  to  establish  its  own  printing  plant.  This  could 
have  been  done  for  less  than  half  a  million  dollars,  which  was  one-half  of 
the  city's  annual  expenses  for  printing.  It  could  have  purchased  blank  books 
and  stationery  direct  from  the  manufacturers  and  saved  another  quarter  of 
a  million  dollars  a  year. 

The  commission  which  investigated  the  printing  charges  and  the  pur- 
chase of  stationery  reported  that  a  total  expenditure  for  these  purchases,  in- 
cluding text  books  required  by  the  Board  of  Education,  was  $3,402,000  tn  one 
year.  The  report  also  showed  that  the  city  paid  $97,000  for  pencils,  sponges, 
pads  shears,  rubber  erasers,  and  that  the  total  cost  of  blank  books  used  tn 
one 'year  was  $151,000.  It  also  discovered  that  a  large  percentage  of  the 
money  paid  out  for  advertising  in  the  daily  and  weekly  newspapers  was  re- 
ceived as  commission  bv  a  firm  of  advertising  agents  organized  for  the  pur- 
pose of  distributing  the  city  advertising.  This  was  contrary  to  law,  and  was 
only  carried  on  because  the  mayor's  own  secretary  profited  financially  through 
this  advertising  concern.  This  firm  of  advertising  agents  received  approx- 
imately forty  per  cent,  of  all  advertising  which  it  placed  in  the  daily  or 
weekly  newspapers,  and  the  committee's  report  showed  that  commissions  paid 
to  this  firm  by  the  newspapers  on  moneys  received  from  the  city  m  a  few 
years  approximated  two  hundred  thousand  dollars. 

Such  was  the  waste  of  the  city's  funds  in  payment  for  advertising  in 
the  daily  and  weekly  newspapers,  not  one-third  of  which  was  necessary  or 
of  any  particular  value  to  the  people.  Just  before  the  city's  financial  failure 
it  was  disclosed  that  in  the  advertising  of  proposed  railway  franchises  the 
cost  of  the  advertising  space  in  the  daily  newspapers  was  more  than  the  city 
received  in  revenue  from  the  particular  franchise  in  half  a  dozen  years. 

In  connection  with  the  waste  of  city  money  in  superfluous  advertising, 
the  mismanagement  of  its  license  bureau  should  be  taken  into  account,  be- 
cause the  licensing  of  peddlers  and  other  trades-people  was  part  of  the  func- 
tion of  the  mayor's  subordinates.  The  License  Bureau  was  under  direct 
jurisdiction  of  the  mayor's  office,  and  the  mayor's  secretary  virtually  shared 
responsibility  with  the  license  commissioner  for  the  proper  issuance  of 
licenses.  An  investigation  of  the  management  of  the  License  Bureau  a 
few  years  before  the  city's  failure  showed  that  the  meanest  sort  of  graft  was 
exacted  from  peddlers,  bootblacks  and  other  petty  tradespeople,  for  the 
privilege  of  doing  business  under  a  city  license.  The  report  of  the  city's 
commissioners  who  investigated  the  management  of  this  office  disclosed  that 
forfeited  licenses  were  frequently  reissued  for  a  consideration,  that  licenses 
were  traded  in  through  intermediaries  and  not  issued  in  the  regular  manner, 
that  no  proper  record  of  licenses  issued  or  reissued  was  kept  and  that  the 
funds  of  the  license  bureau  were  improperly  used  by  those  who  were  charged 
with  the  responsibility  of  collecting  them  and  depositing  them  to  the  city's 
credit.  An  illicit  traffic  was  found  to  exist  in  the  licenses  for  push-cart 
peddlars,  the  licenses  being  sold  for  as  much  as  $25  each,  the  legal  fee  being 

131 


only  $4  for  a  new  license  and  $2  for  a  renewal.  The  legal  fee  for  a  common 
show  license  (moving  picture  show)  was  $25  and  $12.50  for  a  renewal,  though 
the  fee  exacted  m  most  cases  by  those  in  authority  in  the  license  bureau  was 
between  $50  and  $150  additional. 

Among  other  victims  of  the  license  extortion  were  organ-grinders  and 
boot-blacks,  the  boot-blacks  being  assessed  surreptitiously,  because  their  stands 
protruded  beyond  the  stoop-line  on  the  city's  streets  or  because  they  operated 
more  chairs  to  a  stand  than  allowed  by  a  city  ordinance.  One  of  these  boot- 
blacks testified  that  he  paid  an  occasional  $5  bill  for  the  privilege  of  keeping 
an  extra  chair  on  his  stand.  A  push-cart  peddler  also  testified  that  he  had 
a  hcense  from  a  policeman  for  $20  and  that  prior  to  the  purchase  of  this  license 
he  had  been  arrested  by  the  same  police  oMccr  for  peddling  without  a  license 
He  also  testified  that  on  more  than  one  occasion  after  purchasing  his  license 
he  was  required  to  pay  50  cents  to  the  policeman  as  a  gratuity  not  to  be  dis- 
turbed in  his  business.  Another  peddler  also  testified  that  he  paid  $20  to  a 
police  officer  who  secured  a  license  for  him  and  that  he  paid  the  same  sum 
to  the  same  police  officer  to  secure  another  license  for  a  friend.  The  le^al 
tee  for  these  licenses  is  four  dollars  each. 

The  number  of  licenses  issued  and  reissued  by  the  license  bureau  each 
year  was  m  the  thousands,  the  total  annual  revenue  of  the  bureau  being 
$400,000.  This  money  was  handled  in  so  careless  a  manner  that  the  funds 
collected  were  not  always  available  by  the  city  authorities.  There  were  deficits 
in  the  collections  and  a  blank  check  signed  by  the  responsible  deputy  in  the 
bureau  was  left  on  deposit  with  the  financial  clerk  to  cover  the  deficiencies. 

It  was  in  the  purchase  and  use  of  automobiles,  that  the  extravagance 
of  the  city  was  plainly  shown.  The  city  had  spent  more  than  $1,000,000  for 
the  purchase  of  automobiles  up  to  the  time  of  its  financial  embarrassment, 
and  It  had  on  hand  as  many  as  200  high-priced  motor  cars  allotted  to  the 
various  city  departments,  the  average  cost  of  which  was  $2,000.  One  depart- 
ment had  as  many  as  seventeen  automobiles  at  its  command,  and  the  manner 
in  which  these  expensive  vehicles  were  used  was  disclosed  one  day  when  a 
subordinate  in  the  Water  Department  who  was  formerly  a  newspaper  reporter 
and  who  performed  practically  no  service  though  he  drew  a  comfortable 
salary,  was  injured  in  a  collision.  This  subordinate  was  motoring  through 
the  park  on  his  way  to  the  suburbs  accompanied  by  an  aeronaut,  who  was 
intending  to  fly  in  his  airship  when  they  reached  their  destination.  //  was 
notorious  that  the  city  automobiles  were  used  for  pleasure  purposes  by  those 
to  whom  they  were  provided,  and  it  was  also  notorious  that  these  automobiles 
cost  the  City  more  than  they  did  private  individuals  and  that  the  bill  for 
repairs  was  at  least  100  per  cent,  more  than  that  of  private  owners  of  auto- 
mobiles. ' 

The  city  not  only  purchased  automobiles  for  more  than  $1,000,000,  and 
It  not  only  paid  as  much  as  $400,000  a  year  for  maintenance  and  repairs  but  it 
also  spent  many  thousands  of  dollars  annually  for  the  hire  of  automobiles  for 
special  occasions.  At  least  two  departments  of  the  city  were  supplied  with 
sixteen  automobiles  each,  and  shortly  before  the  city's  financial  collapse  an 
effort  was  made  to  induce  the  city's  financial  body  to  acquire  new  motor  cars. 
Ihe  claim  of  one  of  the  city's  borough  executives  was  that  his  chief  engineer 

132 


was  without  the  convenience  of  an  automobile,  though  the  records  showed 
rat  two  automobiles  had  been  provided  for  the  use  of  that  executive  ssubor- 
dinates  during  the  preceding  six  months.  The  executive  asserted  that  two 
of  his  Automobiles  were  useless  when  purchased,  and  that  two  others  should 
be  on  the  "scrap  heap."  Nevertheless,  $2,500  was  appropriated  for  the  pur- 
chase  of  a  new  automobile  by  this  borough  official. 

Such  was  the  story  of  the  city's  wasted  funds  as  expressed  by  its  extrava- 
gance in  automobiles.    It  was  typical  of  the  lavishness  of  city  expenditures  in 
other  directions,  the  wastefulness  being  emphasized  by  the  fact  that  the  auto- 
mobiles were  used  oftener  for  pleasure  purposes  than  for  the  transaction  of 
the  city's  business.    The  chief  sanitary  official  of  the  health  department  as  well 
as  most  other  officials  generously  supplied  with  city  automobiles,  were  the 
grossest  offenders  in  this  direction.     The  madness  for  city  automobiles  grew 
so  rapidly  that  sometimes  half  a  dozen  of  them  were  purchased  at  a  time 
The  annual  cost  of  their  maintenance  alone  was  sufficient  to  pay  interest  at 
six  Per  cent,  on  $7,000,000,  such  was  the  recklessness  with  which  city  auto- 
mobiles  were  used.     Not  infrequently,    these    expensive    motor    cars    were 
smashed  against  elevated  pillars  and  crushed  out  of  appearance.     They  be- 
came useless  junk  after  each  such  accident  and  were  disposed  of  for  less  than 
the  value  of  the  metal  alone.     Some  of  the  city's  automobiles  sold  at  public 
auction,  so  that  new  ones  might  be  purchased,  were  hired  by  the  city  after 
they  were  sold,  or  were  used  for  hacking  purposes  for  many  years  by  those 
who  purchased  them.     This  practice  of  buying  the  city  s  automobiles  for  a 
small  fraction  of  their  value  and  renting  them  to  the  city  at  the  value  of 
new  cars,  was  just  as  common  as  was  the  practice  of  selling  the  city  s  horses 
and  hiring -them  from  the  purchasers.     The  loss  to  the  city  was  relatively 
the  same  in  each  case.  ^ 


^. 


h"! 


I 


133 


134 


CHAPTER  XX 

THE  CITY  ELECTED  A  "REFORM"  ADMINISTRATION,  BUT 

THE  FAILURE  OF  ECONOMY  ONLY  AGGRAVATED 

ITS  FINANCIAL  EMBARRASSMENT. 

For  more  than  a  score  of  years  prior  to  the  city's  bankruptcy,  its  ad- 
ministrative expenditures  grew  at  an  alarming  rate  and  its  bonded  debt  and 
interest  burden  increased  in  proportion.  The  city's  ultimate  embarrassment 
was  slowly  becoming  apparent  to  those  who  studied  its  financial  affairs.  In 
fact  a  former  Unancial  officer  of  the  city  issued  a  pamphlet  several  years 
before  the  banfsruptcy  in  which  he  told  specifically  of  the  city's  financial  con- 
dition and  of  the  prospect  of  bankruptcy  within  ten  years.  His  prophecy 
was  based  on  the  ratio  of  increase  in  the  city  debt  and  expenditures,  which 
he  emphasized  in  his  pamphlet  and  which  was  given  wide  circulation  dur- 
ing a  campaign  for  the  election  of  public  officials  on  a  program  of  economy. 
The  warning  however  was  lost  soon  after  the  new  officials  were  elected. 

Efforts  were  made  by  these  officials  in  the  beginning  of  their  administra- 
tion to  reduce  the  cost  of  city  government,  but  these  efforts  were  effectual 
only  in  spots.  The  influences  that  urged  and  commanded  expenditures  of 
public  funds  were  overpowering,  and  though  the  city  officials  aimed  at  econ- 
omy, they  were  unable  to  carry  their  efforts  to  successful  conclusion.  It  was 
during  this  "reform"  administration,  elected  on  a  pledge  of  economy,  that  the 
city's  expenditures  continued  to  increase  and  that  the  crisis  in  the  city's  affairs 
developed.  It  was  in  their  failure  to  stop  extravagance,  as  well  as  in  their 
waste  of  public  funds,  that  the  condition  of  insolvency  developed. 

The  city's  profligacy  began  to  overtake  it  almost  as  soon  as  the  new 
officials  entered  office.  They  had  inherited  a  bad  system  of  budget-making 
which  was  slowly  improved,  and  they  were  also  the  victims  of  a  condition 
that  existed  in  the  city's  financial  department  which  made  it  almost  im- 
possible to  tell  just  what  the  city's  actual  credit  was  at  any  given  time.  This 
lack  of  information  tempted  city  officials  to  demand  larger  appropriations 
for  public  "improvements"  than  was  judicious,  and  the  temptation  for  lavish 
expenditure  was  irresistible  in  the  face  of  the  insistent  demands  of  wealthy 
property  owners  that  the  city  buy  their  land  and  that  the  city  undertake 
"improvements'*  for  no  other  purpose  than  to  spend  money. 

It  was  under  the  spur  of  official  recklessness  in  these  expenditures  and 
in  increased  payrolls  for  city  employees  that  the  annual  budget  for  city 
administration  grew  from  $77,000,000  to  $193,000,000  in  a  period  of  fifteen 

135 


years.  This  growth  was  extraordinary  when  contrasted  with  the  increase 
in  the  city's  population  for  the  same  period.  The  population  grew  only  52 
per  cent.  The  growth  in  the  city's  bonded  debt  however  was  even  more 
startling  than  was  the  city's  budget  for  routine  administration.  In  the 
same  period  of  fifteen  years,  the  city's  bonded  indebtedness  increased 
250  per  cent,  or  from  $340,000,000  to  $1,200,000,000,  an  increase  of  $860,000,- 
000.  This  extraordinary  addition  to  the  public  debt  was  only  made  possible 
through  the  increase  in  assessments  of  the  city's  real  estate,  which  furnished 
an  index  of  the  city's  legal  borrowing  power.  Under  the  law,  the  city 
could  become  indebted  only  to  the  amount  of  ten  per  cent,  of  its  assessed 
value,  and  during  the  period  of  fifteen  years  referred  to,  the  assessed  valua- 
tion of  taxable  property  expanded  from  $3,400,000,000  to  $8,600,000,000,  or 
a  total  increase  exceeding  170  per  cent.  This  increase  enabled  the  city  to 
contract  a  net  bonded  debt  of  $860,000,000,  and  this  extreme  figure  was 
reached  at  the  end  of  the  fifteen  years'  period  in  question. 

//  was  then  realized  that  not  only  had  the  limit  of  the  city's  borrozving 
capacity  been  overtaken,  but  that  its  taxing  power  had  also  been  exerted 
to  the  limit.  The  tax  rate  ranged  from  1.81  on  a  full  valuation  basis  to 
almost  two  per  cent.,  the  different  rates  applying  to  different  sections  of  the 
city.  The  fact  was  that  at  the  end  of  the  fifteen  year  period  in  question  the 
city's  actual  tax  rate  was  more  than  two  per  cent.,  because  the  total  assessment 
on  which  the  official  rate  was  levied  zvas  in  excess  of  the  true  value  of  tax- 
able property.  In  fact  the  city's  financial  officer  himself  franlily  acfmowl- 
edged  that  the  city's  constitutional  tax  rate  had  been  exceeded  and  that 
there  was  no  prospect  of  reduction  in  iaxes  or  expenditures  for  many 
years.  The  city's  financial  officer  based  this  portentous  assertion  on  the 
fact  that  the  city's  annual  interest  charge  to  maintain  the  city's  credit 
on  its  outstanding  bonds  was  growing  at  the  rate  of  several  million  dollars 
a  year,  and  that  at  the  end  of  the  fifteen  year  period  in  question  it  exceeded 
$60,000,000  a  year,  or  ten  dollars  a  year  for  every  man,  woman  and  child 
in  the  community.  This  condii.on  was  naturally  serious  because  the  income 
of  the  average  family  in  the  city  consisting  of  five  persons,  was  less  than 
$800  a  year.  On  such  an  income,  an  annual  payment  of  $50  by  the  head  of 
each  household  for  interest  on  the  public  debt  was  staggering. 

The  interest  debt  accumulated  on  expenditures  for  so-called  public  im- 
provements, these  expenditures  averaging  about  $50,000,000  a  year.  At  one 
time  in  the  city's  career,  bonds  drawing  interest  at  the  usual  rate  for  ten 
years  or  more  were  issued  for  the  purchase  of  supplies  which  were  con- 
sumed or  used  up  within  six  months.  Interest  alone  on  these  bonds  exceeded 
the  actual  value  of  the  supplies  purchased.  It  was  this  methods  of  financing 
which  was  countenanced  in  no  business  establishment,  which  hastened  the 
city's  financial  downfall.  It  was  logical  that  time  alone  should  produce  the 
effect  which  bad  management  and  wasteful  business  methods  provoked.  The 
city's  serious  financial  condition  became  apparent  to  the  taxpayers  and  to 
average  citizen,  when  the  cost  of  government  became  so  great  that  the  rate 
of  taxation  became  burdensome. 

For  many  years,  before  the  city's  bonded  debt  was  even  half  what  it 
was  at  the  time  of  the  city's  collapse,  the  tax  rate,  though  exceeding  two 

136 


ner  cent.,  was  estimated  on  a  real  estate  valuation  averagmg  less  than 
half  This  tax  rate  was  reduced  to  little  more  than  half  when  real  estate  assess- 
ments were  increased  to  three-quarters  of  the  actual  value  of  property.  At  this 
period  the  total  annual  expenditures  for  administrative  purposes  was  less  than 
$100,0^,000,  including  the  total  interest  payment  on  the  city  s  outstanding 
bonds  The  city's  revenues  from  all  its  property  at  this  time  was  less  than  half 
the  annual  interest  payment,  so  that  most  of  the  administrative  expense  and 
interest  budget  were  raised  by  taxation  on  real  estate.  The  city  s  annual  rev- 
enue  increased  to  approximately  $40,000,000  a  year  at  the  time  of  »ts  failure, 
reducing  the  amount  raised  by  taxation  by  just  that  sum.  J^^^^^^^f  ^f  f "' ^,°^- 
ever,  did  not  relieve  the  taxpayers  because  the  interest  burden  itself  at  that  time 

was  almost  twice  as  large.  .      ,     ,  ^        a 

It  was  with  the  prospects  of  an  annually  increasing  budget,  tax  rate  and 
interest  payment  that  the  new  administration  was  elected  to  office  on  a  pro- 
gram of  economy  and  on  a  demand  for  efficiency  m  all  branches  of  the  city 
government.  The  keynote  of  the  campaign  was  both  efficiency  and  economy, 
and  those  who  had  retained  political  control  in  city  affairs  for  many  years  were 
turned  out  of  office  because  of  the  extravagance  that  had  grown  up  under 
them.  In  fact,  not  only  was  extravagance  demonstrated  but  is  was  proven 
through  formal  investigation,  that  the  public  funds  had  been  deliberately 
wasted  so  that  certain  individuals  might  profit  at  the  expense  of  the  city. 
These  wasted  public  funds  did  not  immediately  produce  the  ill  effects  final  y 
arrived  at,  because  extravagance  was  gradual  and  because  lavishness  could 
not  be  determined  until  after  expenditures  had  been  made  and  until  it  was 
possible  for  those  interested  in  the  public  welfare  to  make  the  discovery. 

This  discovery  and  the  proof  of  waste  were  matters  of  slow  develop- 
ment and  the  brazeness  of  those  in  office  who  were  responsible  for  the 
mismanagement,  carried  the  city's  damage  t\  ^^^^  j^"^*^"  ^  ^*  .,^f  %*^^ 
accumulated  result  of  all  this  mismanagement  that  led  to  the  city  s  final 
ruin,  and  the  course  of  the  city's  career  during  its  last  several  years,  when 
each  expenditure  of  an  unnecessary  dollar  meant  the  hastening  of  the  city  s 
financial  end,  should  be  told  in  detail.  ,    ,     , 

In  order  to  emphasize  the  acuteness  of  the  city's  condition  and  the  lav- 
ishness with  which  its  money  was  spent,  an  exhibition  of  "waste  was  held 
prior  to  the  "reform"  election.  The  purpose  of  the  exhibition  was  to  im- 
press  on  the  minds  of  taxpayers  and  voters,  exactly  what  the  cost  of  mis- 
government  meant  in  dollars  and  cents.  In  line  with  this  purpose,  the  cost 
of  each  article  purchased  by  the  city  was  ascertained,  and  it  was  emphasized 
in  charts  and  diagrams,  and  by  the  exhibition  of  the  articles  themselves. 

The  effect  of  all  this  dramatic  recital  of  the  high  cost  of  city  government 
was  apparent  in  the  election.  More  than  half  the  voters  in  the  city  had 
visited  the  exhibition  chambers  where  these  articles  were  displayed,  labelled 
with  their  excessive  cost  and  with  their  actual  value,  and  when  election 
day  arrived,  the  party  which  had  been  in  power  and  under  whose  control 
a  large  part  of  waste  was  effected  was  voted  out  of  power. 

The  election  was  of  singular  result.  The  political  organization  which 
was  held  responsible  for  the  accumulated  extravagance  of  preceding  years 
succeeded  in  electing  the  mayor  who  up  to  that  time  was  regarded  as  an 

137 


I 


I 


"independent  and  fearless"  jurist.  The  "reformers"  elected  the  rest  of  the 
city  ticket.  The  jurist  had  accepted  the  nomination  of  the  organization 
because  it  was  numerically  strongest  in  the  city,  and  the  organization  ac- 
cepted his  candidacy  because  he  presented  a  mask  of  "independence"  to  the 
people. 

The  candidate's  cunning  was  pronounced.  He  was  well  past  middle 
age  when  nominated  for  the  office  of  mayor,  and  he  enjoyed  a  career  of 
political  intrigue  and  adroitness  which  was  almost  unparalleled.  The  can- 
didate had  studied  the  classical  lore  in  his  younger  days;  in  fact  he  had  pre- 
pared for  the  priesthood  before  he  entered  politics.  He  had  been  reared  on 
a  farm  and  taught  the  value  of  thrift  and  he  learned  the  art  of  the  poHtician 
through  his  practice  at  the  bar.  He  entered  the  field  of  politics  and  when 
about  thirty  years  of  age,  he  was  designated  official  counsel  to  a  commission 
in  one  of  the  city's  suburbs,  created  to  dispose  at  public  sale  of  all  the 
fallow  lands  and  sandy  beaches  of  that  community. 

This  period  of  employment  lasted  about  a  dozen  years  and  it  brought 
large  profit  and  prestige  to  the  young  practitioner.  Many  of  the  parcels  of 
property  disposed  of  by  the  commission  to  which  he  was  counsel  were  sold 
far  under  their  actual  value  and  after  two  or  three  transfers  of  title  found 
their  way  into  the  possession  of  persons  of  political  prominence  or  their 
lelatives. 

One  of  the  parcels,  consisting  of  many  acres  of  land  and  beach  front, 
was  offered  for  sale.  One  bid  was  for  $182,000  and  another  was  for  $1,000 
more.  Instead  of  accepting  either  of  these  bids,  the  commission  guided  by 
the  young  attorney  rejected  both  of  them  and  announced  that  the  property 
had  been  awarded  to  a  merchant  who  was  a  client  of  the  commission's 
counsel,  for  $181,000.  Four  years  went  by,  but  the  property  still  remained 
in  legal  possession  of  the  commission,  the  merchant  who  was  supposed  to 
have  offered  $181,000  not  having  taken  title.  The  property  was  finally  re- 
auctioned  and  sold  for  $150,000,  the  town  which  offered  it  for  sale  losing 
$32,000  and  interest  for  four  years. 

It  was  this  same  merchant  who  a  few  years  later  made  a  bid  for  public 
prominence,  and  engaged  the  young  attorney  to  prevent  the  sale  of  a  water 
company  to  the  city  for  the  sum  of  $2,000,000.  It  did  not  appear  at  the  time 
but  it  subsequently  developed  that  the  young  attorney  himself  had  been  counsel 
to  the  water  company  prior  to  his  action  to  prevent  the  sale.  In  fact,  the  plan 
to  sell  the  water  company  to  the  city  originated  whUe  he  himself  was  associated 
with  those  who  owned  the  company  and  the  franchise  which  had  been  obtained 
from  the  state  legislature.  It  was  only  after  the  water  company  had  been  ac- 
quired by  a  more  powerful  political  faction,  that  the  action  to  stop  the  sale  to 
the  city  was  provoked.  The  lawyer  had  been  superseded  in  the  water  company 
by  a  rival,  and  it  zvas  this  pique  that  brough  about  retaliation  through  the  court. 
The  outcome  of  the  suit  was  that  the  sale  was  stopped,  the  price  which  the 
city  paid  was  reduced,  and  the  young  attorney  and  his  client  gained  public 
applause  and  prominence. 

A  few  years  later,  the  attorney  again  came  into  public  attention  as  candi- 
date for  the  Supreme  Court.  The  popularity  which  he  won  in  preventing  the 
sale  of  the  water  company  to  the  city  for  $2,000,000  made  him  a  prominent 

138 


factor  in  the  campaign.  As  already  stated,  the  attorney  had  been  counsel  to  the 
land  commission  in  an  adjoining  community  for  about  a  dozen  years,  and  m  that 
capacity  he  enjoyed  confidential  relations  with  the  leading  political  factor  ihcre. 
This  politician  declined  to  endorse  the  lawyer  as  candidate  for  justice  and  his 
declination  resulted  in  the  nomination  of  the  lawyer  by  a  rival  polrtical  faction. 
The  campaign  which  followed  was  sensational.  The  lawyer  was  elected  in 
spite  of  the  dishonest  opposition  of  his  former  political  patron  whose  fol- 
lowers stuffed  the  ballot  boxes,  and  when  the  campaign  was  over  and  the 
animosities  of  the  campaign  subsided,  developments  of  an  interesting  nature 
followed.  The  result  of  the  election  was  carefully  canvassed,  and  the  frauds 
that  were  perpetrated  at  the  polls  were  astutely  exposed.  The  upshot  of 
the  investigation  was  that  the  politician  who  had  denied  the  lawyer  the  nom- 
ination, and  who  was  also  the  lawyer's  political  patron,  was  convicted  of 
complicity  in  the  ballot  frauds  and  sent  to  prison;  and  this  event  was 
the  beginning  of  the  political  triumph  of  the  ''independent  and  fearless 
jurist  who  was  elected  to  ofUce  as  mayor  of  the  city  on  the  "reform"  ticket 
on  a  platform  of  economy  and  on  a  pledge  to  "save  the  city  from  the  trac- 
tion looters"  and  send  them  to  jaiU 


i 


\i 


^ 

K 


139 


H 
O 

< 
X 


\ 


140 


CHAPTER  XXI 

THE  MAYOR'S  CHARACTER  WAS  GRADUALLY  REVEALED 

BY  HIS  OWN  OFFICIAL  ACTS,  AND  HIS  "ECONOMY" 

AND  THAT  OF  HIS  ASSOCIATES  IN  PUBLIC  OFFICE 

CONTINUED  TO   HASTEN  THE  CITY'S  END 

The  mayor  entered  office  under  the  most  favorable  auspices;  in  fact, 
his  candidacy  had  been  supported  by  most  of  the  influential  newspapers  in 
the  city,  and  as  the  executor  of  a  large  estate,  he  held  an  interest  in  one  of 
the  city's  leading  daily  journals.  Prior  to  the  jurist's  nomination,  all  steps 
were  taken  to  prepare  his  entrance  into  the  campaign,  a  dramatic  situation 
having  been  created.  For  many  years  the  jurist  had  rendered  judicial  de- 
cisions in  favor  of  the  gambling  element  of  the  city  and  of  those  who  profited 
by  the  conduct  of  other  illegal  business.  In  most  of  his  decisions,  the  jurist, 
in  deciding  for  the  law-breaker,  insinuated  that  the  police  were  actuated 
solely  by  motives  of  blackmail.  His  unfriendly  attitude  toward  the  police 
was  not  surprising,  therefore,  when  the  jurist  appeared  in  the  newspapers 
one  morning  as  champion  of  a  young  man  who  had  been  arrested  several 
times  and  who  charged  that  he  was  the  victim  of  police  persecution. 

The  mayor  had  written  a  stinging  letter,  copies  of  which  were  furnished 
to  the  newspapers  for  publication,  in  which  he  demanded  that  the  photograph 
of  the  boy  be  removed  from  the  gallery  of  suspected  criminals,  and  he  de- 
nounced the  practice  of  making  such  photographs.  The  commissioner  of 
police  maintained  that  the  boy  was  properly  arrested,  that  his  photograph 
was  properly  placed  in  the  gallery,  and  he  declined  to  accede  to  the  jurist's 
demand.  The  latter  then  wrote  to  the  mayor  of  the  city  requesting  that  the 
mayor  order  the  police  commissioner  to  do  as  bidden.  This  request  was  com- 
municated to  the  police  commissioner  by  the  mayor,  but  again  denied  by  the 
commissioner  who  took  pains  to  discover  the  true  character  of  the  boy  who 
had  become  the  cause  celebre.  It  was  found  that  the  boy  bore  a  bad  reputa- 
tion, and  that  he  had  been  in  trouble  with  his  employers  on  various  oc- 
casions. The  police  commissioner  again  refused  to  remove  the  boy's  photo- 
graph from  the  gallery,  and  following  his  removal  the  mayor  ordered  the 
commissioner  to  dismiss  his  secretary  and  one  of  his  deputies  w^ho  had  under- 
taken to  fortify  the  commissioner's  contention  in  the  matter. 

The  refusal  of  the  commissioner  to  dismiss  these  two  subordinates  re- 
sulted in  his  own  dismissal  by  the  mayor  and  in  the  sudden  popularizing  of 
the  jurist  who  later  became  the  candidate  of  the  leading  political  organiza- 
tion. His  candidacy  brought  out  a  great  many  facts  with  regard  to  his 
career  that  had  been  hidden  from  public  view  by  the  judicial  robe  which 
enveloped  him  during  most  of  his  later  life.     One  of  the  most  sensational 

141 


I 


t* 


Ml 


of  these  disclosures  was  the  fact  that  the  jurist  himself  was  virtually  the 
main  instrument  in  the  effort  of  a  certain  ring  of  race-track  gamblers  and 
managers  to  nuHfy  the  law  which  prohibited  gambling  at  the  race-track,  the 
kvinf  of  wagers  on  horses.     The  law  had  been  enacted  only  a  few  yea 
before  whiTe  Ae  jurist  was  still  on  the  bench.    Associated  w.thh.m  m  h.s 
r     hncTne«  was  a  voung  man  of  attractive  personality  who  had  grown  up 
iTder  Ws  tutdage  and  who  was  looked  upon  as  the  jurist's  adopted  son. 
Thts  vo^ng  man  was  energetic  in  his  habits  and  aggressive  in  the  manage- 
ment of  the^urist's  law  business,  and  with  the  backing  of  the  jurist  h.m- 
^f  he  was  aWe  to  acquire  large  wealth  and  a  good  income.    He  was  man- 
.  of  7  race  track  belonging  to  a  relative  when  the  law  which  interfered 
wih  the  race-  rack  gamblig  was  enacted.     It  was  in  order  to  overcome 
Tws  new  legal  hfndraLe  to  the  most  lucrative  part  of  the  racmg  profession 
tha'  means  were  devised  to  nuUify  the  law  so  that  horse  racing  would  re- 
main  a  profitable  pastime.  ^         .    . 

The  jurist  lent  himself  to  this  scheme.  The  plan  was  to  fix  a  test  case 
oredka'ed  on  the  same  conditions  that  prevailed  at  the  race-track,  and  he 
?  I  i^fL^lf  suoolied  the  juridical  skill  to  overcome  the  legal  objection 
{o"uch  form  ofTallrThis  test  case  was  still  unsettled  when  the  contest 
for  the  ™alfty  began,  and  the  whole  arrangement  was  exposed  durmg 
the  cam^ai^.  In  fact,  the  jurist  was  charged  with  conspiracy  to  defeat 
Tr  ^ZaS^his  defence  was  so  feeble  that  the  charge  was  generally  ac- 
ce\e7  I  afrward  developed  that  the  jurist  himself  owned  a  mortgage 
of  property  owned  by  the  race  track  and  that  the  mortgage  had  been  trans- 
ferred to  him  by  a  person  identified  with  the  racing  interest. 

Under  such  auspices  and  with  such  a  beginning,  the  jurist  began  h.s 
term  of  office  as  may'or  of  the  city,  his  foibles  and  eccentr^ities  being  part  y 
understood  He  was  no  longer  the  "fearless  and  independent  jurist  whose 
Wal  ohmppics  projected  insinuations  of  blackmail  against  the  police  and  of 
hejl«  oersecut^ion  on  the  part  of  the  law-breakers.  His  eccentricities  were 
^lilinfng  to  become  known'  but  no  sooner  did  he  enter  the  office  of  mayor 
than  his  hypocrisies  were  further  exposed. 

For  the  most  part,  the  daily  newspapers  were  warm  in  their  praise  ot 
the  mavor's  "admirable  administration."  They  saw  nothing  but  the  most 
oftv  and  nLt  worthy  conduct  in  each  official  act,  and  incidentally  the  news- 
papers themslwes  w'^re  rewarded  for  this  friendly  vision  by  advertising 
patronage  at  the  expense  of  the  city,  by  direction  of  the  mayor  himself.  The 
Cm"rable"  character  of  the  mayor's  administration  continued  to  shine 
thrtigh  he  columns  of  the  daily  newspapers  until  a  sharp  clash  occurred 
t^tw"  en  the  mayor  and  one  of  the  newspapers.  It  was  only  three  and  a  half 
momhs  in  the  mayor's  administration  when  this  breach  came  and  it  resulted 
Tdisclosures  which  partly  removed  the  mask  which  concealed  most  of  the 

"^^  The 'Newspaper  charged  that  one  of  the  first  acts  ^'^^'^^yfl^^'^ 
ministration  was'the  payment  of  a  large  fee  to  a  'awyer.  the  value  of  whose 
services  were  far  from  meriting  the  fee  in  question.  The  awyer  had  been 
engaged  by  the  city  and  the  state  prior  to  the  mayor's  admmistrat.on  to  re- 
cover the  taxes  levied  against  large  corporations  under  a  new  law  which  had 

142 


been  enacted.  The  mayor  denied  that  he  sanctioned  the  payment  of  the  fee, 
^TtheZdisputable  proof  was  that  the  signature  of  hs  clerk  alone  vaUdated 
the  warrant  that  had  beln  issued  for  $48,000  in  payment  of  *^.iJ^^y'^t"-^ 
The  clash  with  this  newspaper  opened  up  channels  through  ^^;h.ch  the  ma>or  s 
Jwac?er  was  further  exposed.  These  channels  produced  information  >.'ith 
regird  o  the  mayor's  eccentric  past,  and  during  the  rest  of  the  administration 
hlfactions  were  closely  scrutinized.  He  had  not  gone  far  m  office  beyond 
tWs.  when  a  shocking  incident  occurred.  The  mayor  was  shot  down  as  he 
boarded  the  steamer  for  a  sudden  departure  abroad. 

In  line  with  the  mayor's  erratic  conduct,  he  had  declared  when  he  en- 
tered office  that  he  would  personally  listen  to  the  grievance  of  any  man  em- 
nloved  by  the  city,  or  any  citizen  He  had  undertaken  to  act  on  various 
compfaints  brought  by  citizens,  most  of  which  related  to  the  abuse  of  power 
hv  the  dtv^police.  The  mayor  had  caused  those  police  officials  against 
iLm  cofplainTwere  lodged,  \o  be  tried  and  dismissed  from  their  position. 
The  fact  that  most  of  them  were  restored  to  duty  subsequently  and  that  they 
recovered  pay  for  the  time  they  were  out  of  employment,  was  not  extensively 
commented  upon  by  the  daily  newspapers  which  still  applauded  the  mayor  s 

every  official  act.  ...  j-      •      j 

The  mayor  was  shot  by  a  mai,  of  middle  age  who  had  been  dismissed 
from  oneTthe  city  departments,  who  charged  that  his  dismissal  was  unjust 
and  who  sought  redress  from  the  mayor.  His  attempts  to  see  the  inayor 
wereTnsuccefsful,  and  his  inability  to  find  employment  or  to  obUin  reinstate- 
ment in  his  position  finally  unbalanced  his  mind.  In  his  madnes  ,  he  held 
The  Liyor  responsihle  for  his  plight,  and  his  attempt  on  the  -ayor  s  life  wa 
provoked  by  the  announcement  in  the  morning  newspapers  that  the  mayor 
intended  saiUng  that  day.  _ 

The  shooting  resulted  in  disclosures  with  regard  to  the  mayor  s  conduct 
in  office  which  were  not  apparent  to  the  general  public  because  of  the  fa,th- 
TesTZ  of  the  newspapers  and  of  their  self  interest  with  the  city  goverri- 
mem     No  sooner  w^sVhe  mayor  stretched  on  his  convalescent  couch  than 
U  was  disclosed  that  flagrant  corruption  existed  among  the  city  s  police.    One 
of  The  b^st  evidences  of  this  was  the  fact  that  the  city's  most  popular  summer 
resor?  harbored  only  the  most  vicious  characters  and  that  vice  flaunted  m 
the  public  concert  halls  and  in  other  public  places  at  the  resort     From  a 
knowledge  of  past  events  in  police  matters,  it  was  conclusive  that  blackmail 
was  pafd  to  the  police  under  such  circumstances.    The  commissioner  of  police 
at  that  time  had  been  a  subordinate  under  the  previous  admmis^ation.     He 
was  elevated  to  the  commissionership  when  his  predecessor  in  office  was  re- 
moved at  the  instigation  of  the  mayor  himself  while  the  latter  was  a  junst 
The  iurist-mayor  continued  the  new  commissioner  m  office  w  spite  of  re- 
peated accusations   that  the  police  department  was  flagrantly   mismanaged 
and  that  the  blackmailing  of  law-breakers  was  common.    It  ^^^  ""«"  «« 
police  commissioner  that  the  conditions  referred  to  were  disclosed  after  the 
mayor  was  shot.    In  spite  of  the  disclosures,  however,  the  mayor  declined  to 
remove  the  commissioner  and  continued  him  in  office  until  the  resignation 
of  a  subordinate  forced  the  mayor's  hand  and  the  commissioner  was  compelled 
to  resign.    The  subordinate,  who  was  the  first  deputy  pohce  commissioner, 

143 


■ 


charged  that  he  could  not  retain  his  self-respect  and  remain  in  the  police 
department.  His  resignation,  which  threatened  a  scandal  in  the  city's  man- 
agement, resulted  in  the  retirement  of  the  commissioner  who  was  promised 
another  position  in  the  city's  service. 

It  was  shortly  after  this  event  that  another  disclosure  followed  which 
again  revealed  the  hypocritical  conduct  of  the  city's  chief  executive.  He  had 
recovered  from  the  attack  made  on  him  by  the  madman  who  sought  rein- 
statement to  his  position  and  he  also  overcame  a  large  measure  of  the  popular 
distrust  which  followed  his  conduct  in  previous  police  matters.  He  was  again 
enjoying  the  friendly  support  of  most  of  the  newspapers.  It  was  toward  the 
fall  of  the  mayor's  first  year  in  office,  that  a  legislative  inquiry  was  beg^n 
into  the  circumstances  surrounding  the  attempt  to  defeat  the  bill  previously 
enacted  into  law,  which  prohibited  race-track  gambling.  It  was  discovered 
that  during  the  period  when  the  bill  was  before  the  legislature  that  the 
mayor's  young  protege  in  the  practice  of  law  d ::d  been  active  to  defeat  the 
measure.  It  had  also  been  charged  that  the  defeat  of  the  bill  was  ac- 
complished in  the  first  instance  by  the  use  of  a  large  corruption  fund  and 
that  the  only  reason  that  the  bill  finally  became  a  law  was  that  the  corruption 
fund  raised  to  defeat  it  a  second  time  was  misapplied.  The  legislature  had 
appointed  a  committee  to  investigate  tlie  accusation  made  by  a  former  legiS' 
later  that  the  mayor's  law  associate  had  directed  the  use  of  the  corruption 
fund  and  that  he  had  withheld  part  of  the  fund. 

No  sooner  did  the  legislative  committee  begin  its  formal  investigation 
by  summoning  witnesses,  than  the  mayor's  protege  vanished  from  the  city. 
He  had  purchased  a  house-boat  and  had  sailed  away  on  a  cruise,  though  he 
at  that  time  occupied  a  responsible  position  in  the  city  government.  He  was 
away  more  than  two  months,  while  the  legislative  investigation  continued, 
and  it  was  at  this  time  that  another  event  happened  which  only  further 
tended  to  awaken  public  interest  in  the  management  of  the  city's  affairs. 
The  mayor's  protege  was  custodian  of  the  city's  funds  at  the  time  of  his  de- 
parture on  his  house-boat,  and  it  was  during  his  absence  that  one  of  the 
banks  containing  a  large  deposit  of  city  cash  became  bankrupt.  The  bank' 
ruptcy  disclosed  that  city  funds  to  an  amount  far  in  excess  of  safety  were 
deposited  in  this  bank  because  of  the  relationship  which  existed  between  the 
principal  bank  directors  and  the  mayor's  protege.  In  fact,  it  was  revealed 
that  just  before  the  bank  failed,  the  protege  directed  that  a  large  part  of  the 
city's  funds  in  another  bank  be  transferred  to  the  failing  institution  to  help 
maintain  its  credit. 

One  disclosure  followed  another  at  this  time  and  the  newspapers  began 
to  ask  "where  is  the  city's  missing  official?"  His  whereabouts  had  been 
concealed,  and  even  the  mayor  pretended  not  to  know  where  he  was.  He 
asserted  more  than  once  that  his  protege  was  ill  and  that  the  newspapers 
were  uncharitable  in  urging  that  he  be  compelled  to  return  to  his  position 
in  tRe  city  government.  It  was  apparent  that  he  remained  away  to  avoid 
the  inquiry  of  the  legislative  committee.  His  return  to  the  city  was  followed 
by  his  indictment  and  he  was  subsequently  convicted  on  the  charge  of  con- 
spiracy in  that  he  had  compelled  a  transfer  of  a  large  deposit  from  one  bank 
to  the  institution  whose  solvency  was  threatened,  and  that  the  transfer  was 

144 


made  under  threat  and  under  promise  that  another  deposit  of  city  s  funds 
would  be  made.  It  was  also  revealed  that  city  funds  were  deposited  in  various 
banks  almost  simultaneous  with  the  lending  of  money  by  these  banks  to  the 
institution  which  afterward  became  insolvent.  The  conviction,  however,  was 
subsequently  reversed  on  the  law  and  on  the  arbitrary  rulings  of  the  court. 
Following  the  indictment  of  this  official,  his  resignation  was  demanded  by 
public  opinion  and  he  remained  out  of  office  until  after  his  trial  and  convic- 
tion There  was  talk  of  his  reinstatement  after  the  court  reversed  the  con- 
viction, but  no  such  step  was  carried  out  during  the  remainder  of  the  mayor's 
term  in  office. 

This  was  in  brief  the  main  developments  which  followed  in  rapid  suc- 
cession and  which  tended  to  throw  a  sharp  light  on  some  of  the  previous 
acts  of  the  mayor's  inscrutinable  career.  It  was  while  he  was  a  candidate 
for  mayor  that  the  jurist  won  public  applause  by  his  trenchant  assaults,  both 
in  speeches  and  in  writing,  against  the  city's  traction  manipulators  who  had 
robbed  the  people  out  of  many  millions  of  dollars  by  stock  manipulations 
and  otherwise.  The  mayor  had  written  a  bitter  denunciation  of  the  crimes 
of  these  "traction  looters"  and  his  fame  as  an  "independent  and  fearless 
jurist  was  almost  confirmed  by  this  exposure  of  the  villany  of  these  traction 
"rascals  "  It  might  be  said  by  way  of  parenthesis  that  the  mayor  added  not 
one  additional  fact  to  the  general  public  knowledge  of  the  crimes  of  the  trac- 
tion magnates;  he  merely  paraphrased  what  had  been  written  tn  the  testimony 
and  records  of  an  official  investigation. 

It  was  expected  that  the  mayor  would  at  least  conduct  himself  toward 
the  perpetrators  of  these  traction  villanies,  just  as  he  expressed  himself  m 
his  "daring"  article.  But  the  traction  "looters"  knew  the  man  better  than 
did  his  readers.  They  were  satisfied  that  he  would  be  as  useful  in  their  service 
as  their  best  paid  attorney,  and  in  this  expectation  they  were  not  disappointed. 
The  mayor  had  made  himself  popular  for  the  time  being  through  the  publica- 
tion of  his  traction  article  which  appeared  six  months  before  the  mayoralty 
election  and  two  months  before  his  attack  upon  the  police  commissioner  in 
behalf  of  the  "poor  persecuted  boy."  The  combination  of  applause  which 
followed  both  the  article  and  the  heroic  defence  of  the  "innocent  youth/ 
contributed  to  his  election  as  mayor. 

The  Traction  Trust  reckoned  well  their  man.  The  city  had  built  one 
subway  line  at  an  expense  of  approximately  $50,000,000  at  the  time  the  jurist 
was  elected  mayor  and  it  was  planning  to  construct  imderground  railroads 
at  a  cost  of  several  times  the  original  investment.  In  fact,  just  prior  to  the 
jurist's  nomination  for  mayor,  he  appeared  at  a  meeting  of  taxpayers  in  one 
part  of  the  city  and  denounced  the  waste  of  public  funds  by  the  construction 
of  a  subway  line  where  the  investment  would  not  pay.  The  subways  which 
were  already  in  operation  were  bringing  in  large  revenue  to  those  who  were 
operating  them,  but  the  city's  share  was  only  interest  on  the  amount  invested 
and  one  per  cent,  as  a  sinking  fund  so  that  the  bonds  might  be  redeemed  at 
the  end  of  fifty  years.  This  arrangement  had  been  denounced  by  the  jurist 
and  by  others,  and  the  jurist  himself  had  charged  that  the  city's  interests 
were  betrayed  in  the  subway  venture  to  the  profit  of  the  political  "boss"  who 
lived  in  idle  luxury  abroad. 

)45 


It  was  not  expected,  therefore,  that  the  mayor  would  himself  engage 
in  any  such  unprofitable  venture  for  the  city.  His  whole  denunciation  of 
the  "traction  looters"  was  in  itself  accepted  as  a  guarantee  that  he  would 
conserve  the  city's  interests  in  all  future  subway  ventures.  His  was  the  last 
betrayal  that  might  be  looked  for,  and  the  people  looked  to  him  to  support 
their  interest  and  to  restore  the  city  financially.  The  city's  security  was 
threatened  because  of  the  continuous  assaults  on  the  public  treasury  and  because 
of  the  continuous  waste  of  public  funds  through  inefficiency  and  mismanage- 
ment 

The  hope  of  the  people,  however,  was  sadly  disappointed.  The  failure  of 
the  mayor  and  his  associates  in  ofTice  to  safeguard  the  city's  interest  in  the 
Anal  subway  negotiation,  hastened  the  city's  financial  end. 


146 


CHAPTER   XXII. 

THE    CLIMAX    OF   THE   CITY'S    MISMANAGEMENT   WAS 

REACHED  WITH   THE   ACCEPTANCE   OF   A   SUBWAY 

CONTRACT   WHICH   DRAINED   THE  CITY'S   LAST 

RESOURCES    AND    WHICH    MEANT    PROFITS 

OF    UNTOLD    MILLIONS    TO    PRIVATE 

INDIVIDUALS 

It  was  expected,  when  the  new  "reform"  administration  went  into  office, 
that   the   first   step   that   would  be   taken  to   save   the   city   money    and   to 
forestall   the   bankruptcy   which  threatened,  would  be   a  large   reduction  of 
the   cost   of   administration   in   every   city   department.      A   pomt   had   been 
made  throughout  the  municipal  campaign,  that  25  per  cent,  of  the  total  sum  paid 
in  salaries  annually  was  wasted  and  that  at  least  50  per  cent,  was  squandered 
in  the  purchase  of  supplies  by  the  various  city  departments.     The  city  had 
on  its  departmental  payrolls  about  80,000  regular  employees,  all  drawing  iair 
salaries.     Some  of  them  were  paid  more  than  others  for  the  same  service 
rendered  and  many  were  paid  more  than  they  would  have  received  for  cor- 
responding service  from  a  private  employer.     Some  city  stenographers  were 
receiving  $40  a  week,  while  others  were  receiving  a  little  more  than  half  that 
sum     On  the  other  hand,  some  of  the  ambitious  city  employees  might  have 
earned  more  money  in  private  employment  than  they  received  from  the  city. 

The  city's  chief  financial  officer  testified  before  a  legislative  committee 
that  at  least  25  per  cent,  of  the  $80,000,000  paid  annually  in  wages  and  sala- 
ries to  city  employees  could  have  been  saved  and  that  fully  50  per  cent,  ot 
the  total  sum  spent  each  year  for  supplies  was  wasted.  In  other  words  the 
city's  chief  financial  officer  testified  under  oath  that  $20,000,000  of  the  $80,- 
000000  distributed  in  salaries  was  wasted  each  year  as  was,  $12,500,000  of  the 
$25,000,000  spent  annually  for  supplies.  The  failure  of  the  new  admmis- 
tration  therefore  to  order  a  reduction  of  at  least  ten  per  cent,  m  the  annual 
cost  of  each  city  department  was  surprising  to  those  who  had  followed  the 
course  of  the  campaign.  The  trend  of  all  campaign  pledges  and  arguments 
was  a  reduction  in  the  cost  of  government  to  save  the  city  from  financial 

embarrassment.  ,       .        t  1  > 

Under  the  system  of  government  existing  in  the  city,  the  people  s  money 
was  spent  by  a  group  of  city  officials  who  composed  the  city's  financial  board 
This  board  consisted  of  the  mayor,  the  city's  financial  officer,  the  president  of 
the  city's  common  council  and  the  heads  of  the  various  city  boroughs.  Every 
one  of  these  officials  was  elected  to  office  on  the  pledge  of  economy,  with  the 
expectation  that  this  pledge  would  be  fulfilled.  The  financial  board  was  di- 
vided politically  and  in  this  division  there  was  hope  of  financial  retrench- 
ment. .  *.  r  *i. 
In  the  beginning  efforts  were  made  to  economize.    In  one  or  two  ot  tne 

147 


1^ 


city's  boroughs  some  unnecessary  employees  were  dismissed,  and  the  asser- 
tion was  made  that  some  of  the  dismissals  were  due  to  politics.  This  accusa- 
tion, however,  was  not  accepted  by  the  public  because  of  the  general  desire 
for  a  reduced  cost  of  government.  Instead  of  economy  by  a  reduction  in 
the  number  of  city  employees,  such  as  the  public  had  been  led  to  expect  from 
campaign  utterances  and  from  the  testimony  of  the  city's  financial  officer 
previously  cited,  the  city's  payrolls  soon  began  to  swell.  Where  a  useless  em- 
ployee was  actually  dismissed  from  one  department,  his  name  was  added  to 
the  payroll  of  another  department  and  the  transfer  meant  no  relief  to  the 
taxpayer.  The  net  result  was  that  the  city's  salary  roll  was  not  reduced.  It 
soon  became  apparent,  instead  of  a  reduction  in  the  number  of  city  employees, 
only  an  increase  resulted.  In  one  borough  office,  the  payroll  was  actually 
lightened  by  the  dismissal  of  a  score  of  scrub-women  who  had  been  em- 
ployed to  clean  city  buildings.  The  economy  thus  effected  was  more  than 
overbalanced  by  the  employment  of  a  single  individual  at  a  salary  larger  than 
the  meagre  wages  paid  to  all  the  scrub-women.  Thus  was  economy  served 
by  uneconomical  management. 

There  were  numerous  projects  pending  for  the  expenditure  of  public 
money  when  the  new  administration  went  into  office.  The  mayor  elected  to 
head  the  "reform"  administration,  sharply  criticized  his  retiring  predeces- 
sor because  of  the  fact  that  the  city's  debt  margin  had  been  reduced  to  the 
minimum  of  safety  at  the  expiration  of  the  predecessor's  term  of  office.  The 
city's  debt  margin  was  less  than  $25,000,00,  which  meant  that  in  an  emergency 
such  as  plague,  famine  or  fire,  the  city  would  be  able  to  borrow  only  up  to  that 
sum  for  immediate  use.  Under  the  state  constitution  the  city's  outstanding 
indebtedness  could  not  exceed  ten  per  cent,  of  the  assessed  value  of  its  tax- 
able real  estate.  It  was  within  $25,000,000  of  this  limit  when  the  retiring  ad- 
ministration went  out  of  office  and  the  "reform"  administration  succeeded. 
It  was  expected  therefore  that  only  the  strictest  economy  would  be  observed 
during  the  succeeding  four  years.  The  city's  interest  burden  was  growing 
at  an  alarming  rate  because  of  debts  contracted  during  preceding  adminis- 
trations and  because  of  commitments  for  future  expenditures  which  could 
not  be  repudiated.  One  of  the  largest  of  these  commitments  was  for  a  new 
water  system  at  a  cost  of  $165,000,000.  Other  large  expenditures  were  needed 
for  such  purposes  as  new  subways,  docks,  new  school-houses,  etc.  Every 
economy  therefore  was  expected  from  the  city's  new  administration. 

At  the  time  the  new  administration  went  into  office,  the  annual 
budget  for  administration  expense  was  $165,000,000  and  the  city's  outstand- 
ing indebtedness  was  $845,000,000.  The  new  commitments  for  Subways,  for 
water,  for  docks  and  new  schools  were  expected  to  bring  this  total  indebted- 
ness up  to  $1,000,000,000,  and  this  expectation  was  more  than  fulfilled.  Not 
only  was  the  funded  indebtedness  increased  to  one  billion  dollars,  but  more 
than  $150,000,000  was  added  to  this  amount.  The  annual  budget  for  adminis- 
tration expense  was  raised  $30,000,000  during  the  four  years  of  the  "reform" 
administration.  It  was  this  achievement  of  "economy"  which  brought  the 
city  to  its  financial  end. 

At  the  beginning  of  the  "reform"  administration  the  city  had  outstand- 
ing water  bonds  totaling  about  $100,000,000  and  bonds  for  the  underground 

148 


.ailroad  totaling  $75.ooo.^-    D"-f  f^'JZ'XS  fT  Z7r  pt;;^^^- 

r  ;,SM'i  .Sr^ll  .-nfcr^'  «■«  continually  paid.    As  P-vously  stated 
the  cUv  was  able  to  borrow  on  bonds  a  sum  not  exceeding  ten  per  cent,  of 

S  were  issued  to  run  for  various  periods  of  Ume  up  to  fifty  years. 

The  economies  in  city  management  that  were  expected  however  d.dn^ 
come  Instead  of  a  reduction,  the  city's  annual  budget  for  admm.s  ration 
increased  $«ooooooo  in  the  «-  ^ear  of^re^orm^^^and    -ono-y^      T^. 

ThTrJmainin^  three  years.    More  bonds  were  not  issued,  not  because  retrench- 
t^tZ    onomy-Zs  intended,  but  only  because  the  city's  debt  --S-  »- 
absolutely  exhausted.    Besides  the  total  of  $,90,000,000  added  to  t^e  bonded 
indebtedness  during  the  four  years  of  "reform"  and  besides  the  total  of  IsS.- 
oci  o^  added  to  the  annual  budget  expenditures  during  the  same  period,  an 
addtonal  obligation  of  $165,000,000  was  entered  into  for  new  subways^    The 
%v  had  no  srfch  margin  to  its  credit,  and  this  gxgantK  ^^^'"''f  f,  "'"tf"!" 
T<^sJible  through  the  expansion  of  the  city's  borrowing  marg,n  by  the  exemp- 
^tZo    dock  Uds  totalling  $70,000,000.     Up  to  this  t^me  every  bond  out- 
standing  that  could  be  classed  as  self-sustammg  had  been  exempted  by  pre- 
^  Administrations.    At  the  time  this  subway  venture  was  undertaken  the 
citv  had  only  $80,000,000  to  its  credit  for  borrowing  purposes,  anrf  this  credit 

Js  made  possible  only  by  an  increase  in  real  '''<'\^'"''^'"'t±Tl^Z 
$000000000.  The  total  increase  in  assessments,  to  be  exact,  was  $932,000,000. 
S  to'abled  the  city  to  borrow  $93,200,000  additional.  Assessmen  s  on 
citv  real  estate  on  which  taxes  were  levied,  had  been  increased  an  average 
of  12  per  cent.,  to  make  this  vast  expenditure  for  subway  purposes  possible. 
The  increase  had  resulted  in  the  overassessment  and  the  "^"taxatwn  oj  prop- 
erty but  the  bulk  of  the  increases  was  made  m  the  first  year  of  the  reform 
administration,  when  public  confidence  in  the  new  administration  was  at  its 
highest  point.  In  that  year  a  total  of  $720,000,000  was  added  to  the  assessment 
aoures.  The  exemption  of  the  $70,000,000  dock  bonds  and  the  increased  as- 
sessment on  city  real  estate  together,  made  it  possible  for  the  city  officials 
to  enter  into  this  extraordinary  subway  venture,  and  this  was  not  done  until 
the  last  year  of  the  "reform"  administration. 

During  the  three  years  that  the  terms  of  the  new  subv^ay  contracts  v^ere 
under  discussion  by  the  members  of  the  city's  finance  board,  various  opmions 

149 


I. 


J  I 


were  entertained  by  the  members  of  that  body  with  regard  to  the  terms  pro- 
posed by  the  railroads  desirous  of  operating  the  new  subway.  The  subway 
that  zvas  in  operation  at  a  total  cost  of  $50,000,000  to  the  people,  was  producing 
a  revenue  of  40  per  cent,  to  the  operating  company.  The  operating  company 
had  originally  capitalized  itself  for  $35,000,000,  though  its  actual  investment 
was  less  than  half  this  sum.  In  order  to  disguise  the  net  profits  on  its  capital- 
ised stock',  it  exchanged  the  stock  for  bonds  of  the  consolidated  company  which 
took  over  the  joint  control  of  the  subzvay,  elevated  and  surface  lines.  The 
stock  in  the  subway  company  was  sold  to  this  consolidated  holding  company 
for  twice  its  original  value,  the  holding  company  becoming  bankrupt  and 
going  into  the  hands  of  a  receiver  a  few  years  later.  Such  financing  was 
naturally  to  be  avoided  in  the  new  subway  venture. 

Though  the  city  had  undertaken  to  spend  $165,000,000  for  these  new  sub- 
ways, its  officials  had  actually  engaged  in  an  expenditure  of  twice  that  sum 
for  subway  purposes,  the  total  cost  of  the  new  subways,  for  whose  opera- 
tion the  contracts  were  let,  exceeding  $330,000,000.  It  required  a  dozen  years 
of  deliberation  for  the  city  to  engage  in  its  first  subway  venture  at  an  invest- 
ment expense  of  $35,000,000.  In  less  than  three  years  the  new  city  officials 
elected  on  a  "reform"  program  for  the  purpose  of  economy,  arrived  at  a 
definite  conclusion  on  a  subway  investment  approximately  ten  times  as  much, 
of  wnich  the  city's  share  of  expense  was  to  be  one-half. 

The  deliberation  over  the  terms  of  the  contract  divided  the  city's  financial 
board  sharply.  The  city's  financial  officer,  the  chairman  of  its  common  council 
and  the  head  of  the  city's  most  important  borough,  were  originally  opposed 
to  terms  proposed  by  the  operating  subway  company.  These  terms  included 
the  construction  of  two  branches  to  the  existing  subway  in  two  of  the  city's 
boroughs  and  of  several  branches  in  other  boroughs,  all  of  them  to  be  oper- 
ated by  the  subway  operating  company  on  a  guaranteed  income  basis.  The 
company  was  making  20  per  cent,  profit  on  the  inflated  capitalization  of  the 
subway  that  was  in  operation,  and  it  demanded  that  for  every  dollar  of  its 
own  money  invested  in  the  new  subways,  that  the  city  should  guarantee  a 
return  to  the  company  of  a  profit  proportionate  to  that  which  it  was  earning 
on  the  existing  subway,  that  profit  to  be  extended  over  the  present  and  the 
new  subway.  It  also  demanded  that  interest  on  the  bonds  issued  by  the 
operating  company  for  the  money  which  it  proposed  to  raise  to  invest  in  the 
venture  as  the  city's  partner,  be  deducted  from  the  income  of  the  new  subways, 
before  a  single  dollar  of  the  earnings  is  extracted  to  pay  interest  on  the  city's 
own  bonds.  In  other  words,  the  indecent  crowding  on  the  existing  subway,  out 
of  which  the  40  per  cent,  dividends  was  earned,  was  to  be  capitalized  under 
the  new  subway  contracts,  so  that  the  same  ratio  of  earnings  would  be  ex- 
tended to  the  additional  private  capital  invested  in  the  new  subways.  Under 
this  contract,  which  was  accepted  by  the  city  officials  in  spite  of  animated 
and  vigorous  opposition  on  the  part  of  the  public,  one  member  of  the  city's 
rapid  transit  board  estimated  that  at  the  end  of  the  $o-year  term  of  operation 
provided  for  in  the  contract,  that  the  city's  return  under  the  contract  would 
be  a  deficit  of  $85,000,000. 

The  proposition  to  guarantee  the  operating  company's  earnings  on  the 
basis  of  the  profits  of  the  existing  subway  was  made  by  the  railroad  company 

150 


itself  and  was  vigorously  resisted  by  the  three  members  of  f^f/'^''^^ 
board  referred  to  They  declared  that  they  saw  no  reason  why  ^'^^  f '^  ^'^^^^ 
guarantee  such  exorbitant  profits  on  the  new  subzvay  venture  especially  since 
those  profits  were  made  out  of  indecent  subway  crowding.  Jhtve  were  other 
conditions  in  the  proposal  to  which  the  same  city  officials  objected.  For  many 
years  the  city's  elevated  railroads,  privately  operated,  were  anxious  to  third- 
track  their  lines  at  their  own  expense.  They  were  prevented  from  doing 
this  by  judicial  intervention  on  the  legal  objections  of  property  owners  along 
the  line  of  the  railroad.  Under  the  terms  of  the  contract  proposed  by  the 
operating  company  to  the  city  officials,  the  city  was  to  allow  the  same  per- 
centage of  profit  on  the  new  capital  invested  in  the  third-tracking  and  equip- 
ping of  the  elevated  road  and  for  their  extension,  as  was  derived  fromjhe 
operation  of  the  elevated  road  up  to  that  time.  In  other  words  instead  of 
venturing  their  own  money  for  the  improvement  and  extension  of  the  elevated 
road  and  risking  the  profits  on  the  private  venture,  the  proposal  was  that  the 
city  should  guarantee  the  profits  on  this  investment  of  approximately  $75r 
000,000,  including  the  cost  of  additional  equipment. 

It  was  realised  for  many  years  that  the  profits  on  public  franchises  in 
the  city  were  swelling  the  fortunes  of  a  group  of  men  far  beyond  what  it  was 
possible  for  them  to  acquire  through  any  other  means  of  financial  operation. 
In  the  earlier  days  of  the  city's  history,  the  largest  private  fortunes  in  the 
city  were  made  out  of  public  franchises  for  the  operation  of  public  ferries^ 
Similar  large  fortunes  were  made  out  of  franchises  for  the  manufacture  and 
distribution  of  gas  and  electric  current  throughout  the  city.    The  largest  for- 
tunes derived  from  public  franchises,  however,  were  made  within  a  dozen 
Clears  of  the  city's  bankruptcy  out  of  the  operations  and  manipulation  of  the 
street  railway  companies.     The  city  had  chartered  a  great  many  of  these 
companies  which  operated  in  different  sections  and  in  different  streets,  and 
just  before  the  first  subway  was  opened  for  traffic,  all  these  separate  surface 
railway  companies  were  brought  together  under  the  same  management.     Ihis 
combination  was  effected  through  various  stages  of  manipulation,  whereby 
millions  upon  millions  in  stocks  and  bonds  were  issued  to  represent  the  value 
of  the  consolidated  properties.    This  manipulation  of  the  securities  of  these 
railways  continued  until  a  total  of  $250,000,000  was  piled  up.    It  was  on  this 
vast  pyramid  of  "capital"  that  the  earnings  of  the  railroad  were  expected  to 
provide  dividends  sufficient  'to  make  the  stock  of  full  market  .value. 

The  strain  on  the  railways'  income  was  too  great  to  sustain  this  moun- 
tain of  securities.  Those  who  engineered  the  manipulation  of  the  railway 
securities  and  who  inflated  the  capital  to  such  gigantic  proportion  were  aware 
of  the  inevitable  collapse  of  the  pyramidal  structure.  They  were  prepared 
for  the  failure  and  when  it  came  they  were  clear  of  any  holdings  xn  the  in- 
flated railway  system.  They  had  derived  all  the  profits  of  operation  through 
"inside"  jugglery  and  they  had  also  derived  untold  millions  of  dollars  through 
the  sale  of  thece  inflated  securities  to  the  general  public.  When  the  collapse 
came,  they  were  able  to  figure  their  profits  in  the  tens  of  millions  each,  and^ 
the  public  was  left  mournful  victims  of  the  spoliation  by  the  traction  looters^ 
This  word  had  been  used  by  the  mayor  of  the  city  in  an  article  which  he 
wrote  when  he  was  still  a  jurist,  to  express  the  criminal  conduct  of  those 

151 


i 


who  engaged  in  this  traction  fraud  and  who  profited  at  the  expense  of  the 
people.  It  was  expected  of  course  that,  as  mayor,  he  ivould  ex-ert  his  mightiest 
endeavors  to  prevent  a  repetition  of  the  exploitation  of  the  people  in  the  new 
subways. 

For  many  years  the  agitation  grew  for  city  ownership,  contrd  and  opera- 
tion of  public  utilities,  so  that  the  profits  on  public  franchises  would  revert 
to  the  city.  It  was  estimated  that  approximately  $50,000,000  a  year  was  gat' 
nercd  by  private  citizens  to  whom  these  franchises  had  been  granted.  Sev- 
eral years  before  the  city's  failure  the  campaign  for  the  election  for  mayor 
had  been  waged  solely  on  this  issue,  and  so  general  was  the  desire  for  muni- 
cipal ownership  and  operation  of  public  utilities,  that  the  majority  of  the 
people  voted  for  the  candidate  pledged  to  this  program  of  public  ownership. 
The  result  of  the  election,  however,  was  frustrated  by  the  manipulation  of 
the  ballot,  the  municipal  ownership  candidate  being  defeated  on  the  official 
returns  by  less  than  one  half  of  one  per  cent,  on  all  the  votes  cast.  It  was 
obvious,  however,  that  the  people  realized  that  the  only  way  the  burdens  of 
government  could  be  lifted  was  by  the  recovery  of  profits  on  public  franchises 
by  the  public  itself. 

In  the  face  of  all  this,  and  in  the  face  of  the  fact  that  the  city  was 
virtually  bankrupt  when  the  "reform"  administration  went  into  office,  THE 
FINAL  STEP  WAS  TAKEN  IN  THE  RUIN  OF  THE  CITY,  WHEN 
THE  CONTRACTS  WERE  SIGNED  FOR  THE  OPERATION  OF  THE 
NEW  SUBWAY.  The  city  debt  had  piled  up  so  enormously  that  the  interest 
charges  were  staggering.  The  annual  budget  for  administration  reached 
nearly  $200,000,000,  including  interest  charges,  and  the  tax  rate  on  real  estate 
was  up  to  two  per  cent,  on  the  full  valuation  of  property.  Real  estate  could 
not  be  sold  for  the  price  of  the  assessment  on  which  taxes  were  levied,  proving 
that  assessments  exceeded  actual  value.  Under  such  conditions,  the  city's 
annual  budget  could  be  no  further  increased,  the  city's  borrowing  margin 
could  not  be  expanded  because  decreases  were  demanded  in  excess  valuations, 
and  the  city  was  stranded  where  its  expenditures  exceeded  income. 

Under  such  conditions,  nothing  but  bankruptcy  stared  the  city  in  the  face 
in  spite  of  the  pledges  of  "economy"  on  which  the  "reform"  administration  had 
been  elected  to  office  four  years  previous.  The  mayoralty  election  was  fast  ap- 
proaching and  the  people  still  retained  the  hope  that  a  new  admini^ration  might 
save  them  from  the  overwhelming  fate  which  threatened.  The  smaller  wastes 
and  squanderings  of  the  public  funds  during  the  preceding  three  years  were 
lost  sight  of  in  general  aniicipation  of  doom  which  pended.  The  city's  entire 
income  for  more  than  a  generation  was  pledged  to  the  traction  interests 
through  the  inequitable  subway  contract,  and  there  was  only  a  lingering  hope 
that  some  way  might  be  devised  to  avoid  the  calamitous  result  expected.  The 
people  aimed  to  elect  a  mayor  and  a  financial  board  which  would  find  a  way 
out  of  the  difficulty  and  to  recover  for  the  city  not  only  a  fair  share  of 
the  profits  on  the  new  subways,  but  also  profits  on  all  city  franchises  which 
brought  millions  of  dollars  annually  to  private  individuals. 


152 


CHAPTER  XXIII 
THE  REFORMERS   CONSPIRE  TO   "SAVE"  THE  CITY. 

The  campaign  which  followed  produced  an  anomalous  situation. 
There  were  many  candidates  of  the  "reform"  type  eager  and  anxious 
to  "save"  the  city,  and  there  was  the  usual  citizens'  committee 
launched  to  provide  candidates  for  the  people.  "Keep  the  politicians 
out  of  office"  was  the  cry  of  the  leader  of  this  committee,  a  young 
man  of  ethical  training  who  assumed  the  role  of  civic  rescuer.  His 
activities  in  ethical  and  social  reform  brought  him  into  close  contact 
with  one  of  the  city's  leading  bankers  who  derived  large  profits  out  of 
the  city  through  the  sale  of  its  bonds.  The  ethical  culturist  was  not 
without  political  self-interest,  for  no  sooner  were  the  candidates  of 
his  committee  elected  to  office  four  years  previous,  than  he  secured 
employment  for  one  of  his  family  in  the  office  of  the  prosecuting 

attorney.  r  ^t.      •.u-  ^\ 

The  host  of  "rescuers"  that  followed  the  banner  of  the  ethical 

leader  was  recruited  from  various  walks  of  life  and  from  the  city  s 
geographical  parts,  after  approved  political   fashion.     The  nucleus 
of  this  group  was  supplied  by  one  of  the  city's  most  conspicuous    re- 
formers" who  occupied  responsible  public  office  and  who  aspired  to 
the  mayoralty.    This  worthy  official  had  also  aspired  to  the  gov- 
ernorship of  the  state  the  year  preceding,  and  his  efforts  to  obtam 
the  nomination  led  him  to  the  home  of  the  city's  most  noted  politician 
-the  leader  of  the  dominant  political  party-whom  his  associates  pub- 
licly condemned.    THE  FACT  THAT  HE  WAS  CHIEFLY  IN- 
STRUMENTAL   IN    AWARDING    CONTRACTS    FOR    THE 
OPERATION  OF  THE  NEW  SUBWAYS  ON  TERMS  THAT 
MEANT  CERTAIN  BANKRUPTCY  TO  THE  CITY,  WAS  ONLY 
ADDED  INCENTIVE  FOR  HIS  PRESENT  AMBITION.    Some 
of  the  newspapers  urged  his  selection  on  the  ground  that  work  on 
the  new  subways  was  already  under  way,  making  no  reference  to  the 
gross  inequality  of  the  contracts  from  the  public  point  of  view.    Our 
worthy  candidate  was  therefore  well  favored  with  newspaper  support. 
For  several  months  before  his  candidacy  was  announced  or  before 
the  nucleus  of  the  new  citizens'  committee  was  made  known,  con- 

153 


\ 


!jH 


ferences  were  held  by  various  interested  persons  who  assured  the 
candidate  of  financial  support.  The  candidate  himself  had  previously 
been  in  the  pay  of  one  of  the  leading  railroad  corporations  in  the 
office  of  its  chief  counsel,  and  he  had  served  as  the  head  of  a  quasi 
civic  organization,  from  which  position  he  was  elected  to  public 
office.  THE  FACT  THAT  HE  HAD  EXPENDED  TWICE  AS 
MUCH  AS  HIS  PREDECESSOR  (EIGHT  MILLION  DOLLARS) 
DURING  A  PERIOD  OF  FOUR  YEARS  ON  STREET 
PAVING,  was  used  by  his  friends  as  an  argument  in  his  favor.  Had 
he  not  filled  up  the  holes  in  the  public  streets,  they  advanced.  It  was 
not  disclosed  by  them  that  one  of  the  chief  beneficiaries  of  this  paving 
extravagance  was  the  candidate's  intimate  friend,  who  contributed 
liberally  to  his  campaign. 

Our  ambitious  "reformer"  was  of  aesthetic  mold  and  he  achieved 
noteworthily  for  the  people.  He  had,  in  the  face  of  an  ever-rising 
tax  rate  and  in  spite  of  all  other  public  extravagances,  developed  a 
plan  for  a  new  "civic  center,"  and  he  proposed  the  construction  of  a 
new  court  house  at  a  cost  of  many  millions  of  dollars,  as  the  artistic 
hub  of  this  civic  design.  The  old  court  house  occupied  a  part  of  the 
city's  park  behind  the  city  hall  and  this  structure  was  to  be  replaced. 
A  new  site  was  chosen  by  the  city's  financial  board  under  the  spur  of 
our  worthy  "reformer,"  in  spite  of  objections  by  other  members  of 
the  board.  The  public  generally  believed  that  a  new  court  house  was 
needed,  but  it  did  not  approve  the  selection  of  a  new  site  when  an 
adequate  structure  could  be  erected  on  the  site  of  the  old  building. 

The  question  of  site  was  originally  determined  by  a  group  of 
prominent  citizens  who  composed  the  court  house  board  created  by 
an  act  of  the  state  legislature,  and  who  recommended  that  the  new 
building  be  erected  on  the  old  site.  It  was  even  proposed  to  enlarge 
this  site  in  the  park  to  include  an  adjoining  minor  court  house.  This 
proposal  was  endorsed  by  those  who  aimed  to  improve  court  facilities 
without  undue  cost  to  the  taxpayers,  and  the  recommendation  was 
accepted  by  the  judges  who  were  to  occupy  the  building.  It  was  not 
acceptable,  however,  to  our  noteworthy  "reformer,"  whose  scheme  of 
"civic  center"  was  not  aided  thereby.  The  park  area  is  sacred  and 
must  not  be  infringed  even  for  a  temple  of  justice,  he  ruled.  The 
fact  that  the  particular  park  in  question  was  surrounded  only  by  tall 
office  buildings  and  was  used  for  recreation  only  a  few  mornents 
each  day  by  those  employed  in  the  vicinity,  was  no  argument  against 
his  decision  to  exclude  the  court  house  from  the  park. 

154 


The  objections  of  the  park  "defenders"  prevailed.  They  suc- 
ceeded in  overcoming  the  recommendations  of  the  court  house  board, 
though  it  was  conclusively  shown  that  another  site  for  an  adequate 
structure  would  cost  several  million  dollars  and  that  the  city  was 
unable  to  afford  the  expenditure.  An  adequate  structure  on  the  old 
site  could  be  erected  for  less  than  ten  million  dollars,  while  a  new 
structure  on  a  new  site  would  cost  twice  that  sum  because  of  the 
temptation  to  architectural  extravagance.  The  recommendation  of 
the  court  house  board  was  rejected,  and  a  new  site  chosen  by  the 
city's  responsible  officials  at  a  cost  of  more  than  six  million  dollars. 
A  design  for  an  elaborate  structure  was  selected,  but  before  the 
building  could  be  erected  it  was  discovered  that  the  site  was  wrongly 
located,  the  soil  being  too  soft  for  an  adequate  foundation.  A  second 
site  was  selected  adjoining  the  first  at  an  additional  cost  of  six 
million  dollars,  but  the  court  house  was  never  constructed  because  the 
city  became  bankrupt.  The  city  lost  five  hundred  thousand  dollars 
a  year  interest  on  the  bonds  issued  for  both  sites,  besides  two  hun- 
dred thousand  dollars  a  year  taxes,  and  both  sites  were  acquired  at 
three  times  the  value  at  which  they  were  assessed  for  taxation,  the 
assessment  being  presumably  "full  valuation."  The  city  paid  a  large 
part  of  the  architectural  fee  of  six  hundred  thousand  dollars  before 
insolvency  was  reached. 

Our  aesthetic  official  devoted  a  large  part  of  his  time  in  office 
ministering  to  the  welfare  of  the  city's  poor,  and  he  provided  gen- 
erously for  their  health  and  recreation.  He  laid  out  a  row  of  grass 
plots  on  one  of  the  city's  most  crowded  thoroughfares  and  surrounded 
them  with  high  picket  fences  costing  many  thousands  of  dollars. 
The  cost  of  this  "improvement"  was  borne  by  the  taxpayers  who 
owned  the  property  along  the  street.  One  of  the  parcels  acquired  for 
park  purposes  by  our  worthy  official  was  a  strip  of  sandy  beach  at 
one  of  the  city's  seaside  resorts,  which  was  purchased  for  more  than 
two  million  dollars.  Half  of  this  parcel  consisting  of  seven  acres, 
was  owned  by  a  conspicuous  land  speculator  who  had  become  an  inti- 
mate friend  and  associate  of  the  youngest  member  of  the  city's 
financial  board,  the  remainder  being  owned  by  a  railroad  and  by  a 
former  client  of  the  then  mayor  of  the  city.  The  beach  owned  by  the 
land  speculator  had  been  occupied  as  an  amusement  resort,  but  the 
resort  was  burned  and  the  insurance  was  collected  by  the  title  com- 
pany which  owned  the  mortgage.  It  was  urgent  that  the  city  buy 
the  property  so  that  some  value  might  be  created  for  the  million 

155 


dollars  of  bonds  that  had  been  issued  by  the  amusement  company. 
The  land  speculator  and  his  associates  retained  the  most  valuable 
part  of  the  property  for  themselves  and  sold  the  city  the  balance, 
which  was  littered  with  debris.  The  city  paid  thirty  thousand  dol- 
lars to  remove  the  debris  and  the  land  speculator  and  his  associates 
derived  a  rental  of  two  hundred  dollars  a  front  foot  for  eight  hundred 
feet  of  property  on  the  main  thoroughfare,  which  they  retained. 

Some  of  those  who  urged  the  purchase  of  this  parcel  by  the  city 
were  conspicuous  as  social  workers  while  others  were  "leading" 
citizens.  It  was  easy  to  trace  the  motives  of  some  of  them  and  it 
was  also  easy  to  trace  the  inspiration  of  newspaper  articles  endorsing 
the  project.  At  least  one  newspaper  editor  was  well  supplied  with 
bonds  of  the  amusement  company,  while  others  were  suspected  of 
owning  a  fair  share  of  these  securities.  The  city  had  an  area  of 
sixty-three  acres  of  beach  front  adjoining  the  parcel  which  it  acquired 
and  this  area  could  have  been  reclaimed  for  public  use  from  the  water 
which  washed  over  it,  for  one-tenth  the  cost  of  the  fourteen  acres 
purchased;  but  no  eflfort  to  accomplish  this  was  made  by  a  single 
responsible  official.  The  city  paid  six  per  cent,  interest  on  the  full 
amount  of  the  award  for  the  fourteen  acres  for  several  years  and  it 
lost  taxes  on  the  parcel  from  the  moment  it  acquired  title.  This  was 
the  usual  result  with  all  property  acquired  by  the  city,  the  accumu- 
lative effect  hastening  the  city's  end. 

Our  worthy  official  was  particularly  active  in  inducing  his  asso- 
ciates in  the  city's  financial  board  to  acquire  another  parcel  of  beach- 
front at  another  seaside  resort.  He  had  joined  with  them  in  acquiring 
the  parcel  just  described  and  he  led  in  urging  the  purchase  of  this 
other  property,  which  consisted  of  two  hundred  odd  acres  of  sand 
dunes  and  marsh,  fifteen  miles  from  the  congested  part  of  the  city. 
The  round-trip  fare  to  a  point  two  miles  from  the  property  was  forty 
cents,  and  it  was  necessary  to  engage  a  conveyance  in  order  to  ride 
to  the  property.  It  was  obvious  that  this  parcel  was  not  available  for 
the  city's  poor  unless  free  transportation  was  provided,  and  this  could 
not  be  done  except  at  high  cost.  The  parcel  cost  the  city  one  million, 
two  hundred  and  fifty  thousand  dollars  plus  interest  at  six  per  cent, 
for  several  years,  and  no  sooner  was  the  property  acquired  than  part 
of  it  was  turned  over  to  a  private  society  for  a  hospital  pavilion,  to 
which  none  but  patients  of  the  society  were  admitted.  The  public, 
especially  the  poor  for  whom  the  "park"  was  presumably  purchased, 
did  not  enjoy  even  a  breath  of  fresh  air  on  its  sands  before  the  city 

156 


became  bankrupt.  A  few  years  before  the  acquisition  of  this  parcel, 
the  city  had  been  offered  the  same  area  plus  one  hundred  and  sixty 
acres  adjoining  (almost  twice  the  area  acquired  by  the  city)  for  two 
hundred  and  fifty  thousand  dollars  LESS  than  what  the  city  actually 
paid,  the  entire  tract  having  been  purchased  by  the  speculators  who 
sold  the  city  part  at  double  the  price  they  paid  for  the  entire  tract. 

Another  noteworthy  enterprise  of  our  aesthetic  official  with  tax- 
payers' money,  was  the  acquisition  of  another  parcel  of  property  over- 
looking the  river  which  divides  the  city.  This  parcel  was  owned  by 
another  group  of  land  speculators  who  were  anxious  to  dispose  of  it. 
The  property  had  been  previously  offered  to  the  city  and  the  offer 
rejected,  the  city's  experts  appraising  its  value  at  six  hundred  thou- 
sand dollars.  A  mortgage  for  eight  hundred  thousand  dollars  was 
subsequently  placed  on  the  property  and  when  it  was  again  offered, 
the  amount  of  the  mortgage  was  pointed  to  as  an  index  of  its  value. 
"The  city  should  buy  the  park  for  the  poor"  again  urged  our  worthy 
official  who  forever  served  the  welfare  of  his  fellow-beings.  The  fact 
that  the  property  was  situated  on  a  bluff  overlooking  the  river  and 
that  it  was  inaccessible  to  the  city's  poor,  was  no  obstacle  to  its 
purchase.  The  city  already  owned  an  extensive  park  on  the  opposite 
side  of  the  river  in  a  congested  part  of  the  city  and  this  park  was 
well  patronized,  but  there  was  no  prospect  of  congestion  near  the 
newly-acquired  park-area  for  half  a  century.  In  spite  of  this  fact 
its  acquisition  was  urged  as  imperative,  and  one  million,  three  hun- 
dred thousand  dollars  was  paid  for  the  parcel  which  was  unused  up 
to  the  time  of  the  city's  collapse.  Streets  had  been  cut  through  the 
property  to  make  it  attractive  for  the  sale  of  lots  and  it  was  at  lot, 
not  acreage  price,  that  the  city  bought  it.  The  property  could  not 
be  converted  into  a  park  except  at  large  cost. 

It  was  on  top  of  all  this  mishandling  of  the  city's  affairs,  that  our 
worthy  official  sought  elevation  as  mayor  and  his  aspirations  were 
aided  by  those  who  profited  from  the  city.  They  had  found  their 
aspirant  of  service  in  their  enterprises  and  they  aimed  to  reward  him 
by  political  advancement.  The  people  were  asked  to  repose  the 
fullest  confidence  in  the  committee  which  originally  consisted  of 
seven  of  the  candidate's  most  intimate  friends.  This  number  was 
later  increased  to  thirty-five  and  then  to  one  hundred  and  seven,  a 
majority  being  maintained  throughout  in  the  interest  of  the  aspiring 
candidate.  Eschew  political  candidates,  the  committee  advised  the 
people  ;  select  only  those  designated  by  us.    At  the  same  time,  the 

157 


committee  was  arranging  for  the  endorsement  of  its  candidates  by 
one  of  the  two  leading  jpolitical  parties,  the  combination  being 
launched  as  a  "fusion"  of  all  the  saintly  in  and  out  of  politics. 

The  first  part  of  the  program,  the  formation  of  the  committee, 
was  worked  out  by  our  aesthetic  friend  with  satisfaction.  The  com- 
mittee was  organized  in  his  favor  and  his  friends  urged  that  he 
alone  was  worthy  of  the  office  of  mayor.  His  qualifications  were 
pre-eminent,  they  explained.  Had  he  not  consecrated  himself  to  the 
public  welfare  during  three  and  a  half  years  of  office?  Had  he  not 
provided  parks  and  new  subways?  No  mention  was  made  by  these 
exhorters  of  the  prices  paid  for  the  parks  or  of  the  terms  of  the 
subway  contracts.  IT  WAS  THIS  OFFICIAL  ALONE  IN  THE 
SUBWAY  NEGOTIATIONS,  WHO  INJECTED  A  PREFEREN- 
TIAL CLAUSE  GUARANTEEING  THE  OPERATING  COM- 
PANIES SUFFICIENT  PROFIT  TO  PERPETUATE  ALL  THE 
INDECENT  CROWDING  ON  THE  EXISTING  SUBWAY  AND 
ELEVATED  LINES,  EXTENDING  THE  INDECENCY  TO 
NEW  LINES  WHOSE  TRACKAGE  WAS  THREE  TIMES  AS 
GREAT.  THE  INEQUITABLE  TERMS  OF  THE  CONTRACTS 
MEANT  A  CLEAR  GIFT  OF  TWO  HUNDRED  MILLION 
DOLLARS  OUT  OF  THE  POCKETS  OF  THE  PEOPLE  TO 
THE  SUBWAY  OPERATORS  AND  SUBORDINATED  THE 
CITY'S  CREDIT  TO  THAT  OF  THE  PRIVATE  OPERATING 
COMPANIES.  ^ 

Our  aesthetic,  though  ambitious  official  was  not  alone  in  the 
field  for  mayor.  His  friends  on  the  committee  had  managed  his  in- 
terest well  though  other  candidates  developed,  and  in  order  that  par- 
tiality might  not  be  charged,  the  committee  was  unable  to  check  the 
rise  of  new  aspirants,  one  of  whom  was  the  public  prosecutor  who 
had  gained  great  favor  with  the  people.  His  selection  was  also 
favored  by  some  newspapers  and  financial  powers,  and  his  candidacy 
was  encouraged  by  unpledged  members  of  the  committee,  some  of 
whom  regarded  his  choice  from  a  selfish  point  of  view. 

Politics  makes  strange  bed-fellows  and  our  ethical  leader  of  the 
citizens'  committee  was  under  obligation  to  the  prosecuting  attorney 
for  providing  a  berth  for  his  relative  in  office.  He  was  also  champion 
of  our  aesthetic  aspirant,  and  when  the  time  for  a  choice  of  candidates 
arrived,  he  boldly  urged  the  selection  of  the  latter  for  mayor.  A  fact 
which  may  have  moved  his  decision  was  the  personal  antipathy  of  his 
powerful  financial  friend  toward  the  public  prosecutor.    At  any  rate, 

158 


the  latter  was  not  chosen  and  a  deadlock  resulted.  "We  must  choose 
the  man  best  fitted  for  the  place  urged  the  ethical  culturist.  "Your 
man  cannot  win"  retorted  the  supporters  of  the  prosecutmg  attorney. 
In  this  situation,  another  candidate  developed,  and  while  the  two  lead- 
ing aspirants  barred  each  others  way,  the  new  candidate  was  accepted 
as  a  convenient  compromise.  Qualifications  no  longer  ruled ;  expe- 
diency prevailed.  The  successful  candidate  at  the  time  of  his  selection 
was  in  charge  of  an  important  federal  office  in  the  Great  City. 


159 


xn 

CO 


•-) 

i 

•8 

o 

Wi 

•o 

cd 
«> 


CO 


160 


♦  ? 


CHAPTER  XXIV 

THE  "REFORM**  CANDIDATES  WERE  ELECTED  AS  A  RE- 
BUKE TO  THE  POLITICAL  POWER  THAT  IMPEACHED 

AN  UNWORTHY  GOVERNOR. 

The  candidate  selected  by  the  citizens'  committee  for  mayor  was 
a  young  man  not  far  in  his  thirties,  who  had  previously  served  the 
city  in  a  responsible  capacity.    He  had  been  a  member  of  the  city's 
governing  board  and  was  temporarily  head  of  an  important  branch 
of  the  federal  government.    He  had  served  the  city  in  an  inquisitorial 
capacity  and  had  earned  the  distinction  of  being  a  fearless  investi- 
gator.   He  had  advanced  in  official  importance  at  the  mayoralty  elec- 
tion four  years  previous  and  was  again  restlessly  active  for  political 
preferment.     He  realized  that  those  who  presented  themselves  for 
the  mayoralty  before  the  citizens*  committee  were  men  of  ordinary 
clay  and  he  aimed  to  brush  them  aside  at  the  decisive  moment.    His 
friends  aided  him  in  this  plan,  and  he  was  urged  on  the  committee 
as  the  candidate  of  the  leading  political  power  in  the  nation.    He  had 
served  a  few  months  in  federal  office,  and  though  he  accomplished 
nothing  of  value,  he  succeeded  in  extracting  large  advertising  out  of 
the  position.    He  was  in  receipt  of  a  salary  more  than  twice  that  of 
his  previous  employment  by  the  city,  and  his  friends  considered  him 
particularly  fortunate  in  his  new  position.     It  was  obvious  that  the 
young  federal  officer  enjoyed  his  responsibilities  since  he  devoted  most 
of  the  summer  during  which  he  held  office,  to  recreative  pastime. 

He  had  reached  the  determination  after  a  few  weeks  in  office, 
that  the  method  of  work  of  his  several  hundred  subordinates  was 
defective  and  needed  complete  "reorganizing,**  and  with  this  end  in 
view  he  appointed  a  staff  of  "efficiency  experts,"  chief  of  whom  was 
a  person  who  had  served  in  similar  capacity  with  the  federal  govern- 
ment under  the  preceding  administration.  The  work  of  this  "expert" 
and  his  staff  for  the  federal  government  lasted  many  months  and  cost 
a  quarter  of  a  million  dollars,  and  when  a  summary  of  new  work  was 
submitted  to  the  federal  legislature,  the  services  of  the  "experts'*  were 
discontinued.  Their  program  involved  the  expenditure  of  an  addi- 
tional million  dollars,  and  the  legislature  decided  that  sufficient  public 

161 


funds  had  already  been  wasted  on  delusive  "reform."  This  decision  in 
no  way  affected  the  determination  of  the  new  federal  official  whose 
passion  was  "efficiency."  His  chief  "expert"  was  engaged  at  fifty 
dollars  per  day  and  he  permitted  the  latter  to  engage  a  staff  at  from 
fifty  to  two  hundred  dollars  a  week  each,  the  total  cost  of  the  efficiency 
squad  being  about  two  hundred  dollars  per  day.  One  of  these  "ex- 
perts" at  six  thousand  dollars  per  year,  was  a  young  man  who  had 
served  as  secretary  to  the  head  of  one  of  the  city's  departments  and 
whose  chief  function  in  office  seemed  to  be  to  fulfill  his  own  social 
obligations.  He  was  afterward  re-employed  by  the  city,  and  his 
services  were  discontinued  because  he  neglected  the  city's  business. 
The  young  federal  official  announced  with  joy  that  he  would 
institute  "efficiency  and  economy"  in  the  public  service  with  the  aid 
of  his  new  "experts"  who  had  not  devoted  a  single  day  to  the  work 
of  the  office  prior  to  their  employment.  Fortunately  for  the  employes 
of  the  federal  department  the  restlessly  "efficient"  federal  official  was 
selected  as  candidate  for  mayor,  thus  altering  his  plan  of  reorganiza- 
tion. His  successor  in  office  did  not  endorse  his  program  and  dis- 
continued the  work  of  his  squad.  The  selection  of  the  young  candi- 
date for  mayor,  also  disclosed  the  greed  inherent  in  some  political 
"reformers." 

Our  aesthetic  official  who  had  instigated  the  organization  of  the 
citizens'  committee,  had  jockeyed  himself  out  of  first  place  in  checking 
the  rise  of  the  popular  prosecuting  attorney,  and  he  provoked  retalia- 
tion by  those  who  favored  the  latter.  They  charged  him  with  political 
insincerity  and  with  extravagance  in  office;  they  also  charged  him 
with  incompetency,  though  his  friends  pointed  with  pride  to  his 
"achievements."  It  was  discovered  that  while  his  friends  were  making 
capital  of  the  political  sins  of  former  office-holders  belonging  to  the 
dominant  political  party,  our  worthy  candidate  was  seeking  the  sup- 
port of  influential  members  of  that  organization  for  his  own  candidacy. 

The  "reform"  ticket  was  elected  and  our  aesthetic  official  was 
second  in  importance  to  the  young  mayor  who  strangely  enough  had 
vigorously  condemned  him  during  the  preceding  three  years  over  the 
terms  of  the  subway  contracts.  The  young  official  had  charged  that 
the  contracts  were  destructive  of  public  interest  and  that  the  city 
would  be  greatly  injured  if  they  were  accepted.  Nevertheless,  after 
all  the  discussion  of  the  contracts  was  over  and  after  he  had  stumped 
the  city  in  a  campaign  of  personal  opposition  to  their  terms,  HE 
VOTED  FOR  THE  APPROPRIATION  WHICH  MADE  THE 

162 


CONTRACTS  VALID.  This  act  was  not  understood  by  the  people 
who  regarded  his  conduct  as  strongly  in  their  favor.  It  was  not 
Ttrange  therefore,  to  see  these  two  apparently  violent  subway  antago- 
nists,  candidates  for  office  on  the  same  platform. 

Our  aesthetic  official  was  regarded  by  his  friends  ^^  vastly  su- 
perior to  the  young  mayoralty  candidate  in  point  of  pubic  service 
and  they  accepted  his  subordination  on  the  ticket  as  a  noble  sacrifice 
which  the  public  would  appreciate.  They  extolled  his  patriotism  and 
his  public  virtue,  but  as  a  practical  politician  grabbing  ^^r  office,  our 
worthy  candidate  realized  that  it  was  better  to  be  a  small  toad  in  a 
big  puddle  than  no  toad  at  all;  and  besides,  would  he  "ot  soon  ou  - 
shine  the  young  mayor  himself?  Such  was  the  consoling  hope  of  his 
friends  who  yielded  to  the  exigencies  of  politics. 

The  campaign  awoke  the  people  to  a  keen  interest  in  the  achieve- 
ments  of  the  candidates  selected  by  the  citizens'  committee    They  had 
read  a  great  deal  for  several  years  of  the  public  activities  of  the 
leading  candidates;  and  the  subordinate  candidates,  most  of  whom 
were  former  office-holders,  were  also  well  advertised.     It  was  not 
likely,  therefore,  that  the  candidates  would  suffer  for  lack  of  news- 
paper  support;  the  public  being  swayed  largely  by  the  newspapers 
When  it  was  charged  that  the  "reform"  candidate  for  mayor  and  two 
of  his  associates  on  the  ticket  purchased  the  ocean-front  properties 
to  aid  their  friends  rather  than  to  benefit  the  people    the  accusati^^ 
was  not  believed  or  accepted.     ONE  OF  THE  REAL   ESTATE 
^PFCULATORS  WHO  PROFITED  LARGEST  FROM  THESE 
^rSa^N^  THE  BOON   COMPANION 

YOUNG   MAYORALTY   CANDIDATE   WHOM   THE    SPECU- 
LATOR INTRODUCED  INTO  THE  GAYETIES  OF  SOCIAL 

LIFE 

A  disclosure  which  surprised  the  people  was  the  fact  that  the 
"reform"  candidate  for  mayor  had  acted  as  the  financial  agent  of  a 
land  corporation  while  he  was  formerly  in  the  cty  s  employ.  He  had 
gone  abroad  during  a  previous  summer,  and  while  drawmg  pay  from 
the  city  negotiated  with  the  bankers  of  a  foreign  city  for  the  disposal 
of  three  million  dollars  of  bonds  of  the  corporation  whose  property 
was  located  in  an  outlying  part  of  the  city.  The  offer  of  bonds  was 
rejected  by  the  bankers,  and  when  the  young  official  returned  he  col- 
lected a  fre  of  five  thousand  dollars  and  his  law  firm  submitted  an 
expense  account  exceeding  two  thousand  dollars.  This  disclosure  was 
coupled  with  the  announcement  that  prior  to  his  sailing  as  financial 

163 


agent  of  the  land  corporation,  the  young  official  had  voted  to  expedite 
the  construction  of  an  elevated  line  through  the  property  owned  by 
the  corporation,  though  no  public  need  for  such  line  existed. 

Such  was  the  state  of  the  public  mind  when  these  disclosures  were 
made  that  they  produced  no  effect  on  the  outcome  of  the  campaign. 
It  was  also  shown  that  the  land  speculator  who  was  the  young 
mayor's  social  guide,  had  spent  several  thousand  dollars  in  aid  of  his 
canvass  and  that  other  persons  who  drew  large  profits  from  the  city, 
were  among  his  most  liberal  contributors.  ONE  OF  THESE  WAS 
THE  RICHEST  MAN  IN  THE  WORLD  WHOSE  PROFITS 
FROM  THE  PEOPLE  OF  THE  GREAT  CITY  TOTALLED 
TWENTY  MILLION  DOLLARS  A  YEAR;  AND  OTHERS 
WERE  ALSO  BENEFICIARIES  OF  LARGE  PUBLIC  SERVICE 
CORPORATIONS.  The  people  had  been  aroused  over  what  they 
regarded  as  a  flagrant  abuse  of  power  by  the  dominant  political  party 
and  they  were  determined  to  rebuke  that  party  for  its  "arrogance." 
The  governor  of  the  state,  elected  as  candidate  of  that  party,  had 
been  impeached  and  removed  from  office.  "I  am  punished  for  my 
loyalty  to  the  people,"  he  exclaimed,  as  he  was  subjected  to  the 
prosecution  of  an  impeachment  trial.  The  governor  did  not  take  the 
stand  in  his  own  defense,  and  the  fact  that  he  was  aiming  to  create 
a  political  machine  of  his  own  through  misuse  of  public  patronage 
was  not  understood  or  realized  by  the  people.  He  was  removed  from 
office  because  he  failed  to  account  under  the  law  for  many  thousands 
of  dollars  which  he  accepted  as  campaign  contributions  from  indi- 
viduals and  corporations.  The  impeached  governor  sought  "vindica- 
tion" by  running  for  office  as  state  legislator  after  his  removal,  and, 
though  he  was  elected  and  served  one  term,  he  gradually  disappeared 
from  public  view.  He  sought  re-nomination  as  governor  two  years 
after  his  election  to  that  office,  but  the  people  had  penetrated  his 
sham  and  lost  interest  in  his  campaign. 

The  campaign  for  the  mayoralty  was  at  its  height  when  public 
feeling  for  the  deposed  governor  ran  strongest.  The  latter's  friends 
aided  his  campaign  as  candidate  for  the  legislature  that  year  and  the 
agitation  they  produced  insured  the  defeat  of  the  candidates  of  the 
dominant  political  party.  No  accusation  against  the  "reform"  candi- 
dates would  be  accepted  by  the  people,  indignation  over  the  impeach- 
ment being  the  controlling  factor  in  the  campaign. 


164 


CHAPTER  XXV 

THE  FINAL  ASSAULT  ON  THE  CITY'S  CREDIT  CAME  WITH 
AN  ATTEMPT  TO  TURN  OVER  ITS  REMAINING  WATER- 
FRONT    TO     A     PRIVATE     CORPORATION  — THE 
HUMBUG    OF    "EFFICIENCY    AND    ECONOMY" 

WAS  EXPLODED. 

There  was  still  a  lingering  hope  that  the  city  would  be  saved  from 
bankruptcy  when  the  new  "reform"  administration  took  office.  The 
fact  that  the  mayor  and  his  principal  associates  were  important  factors 
in  the  previous  administration  which  hastened  the  city's  end,  was  for- 
gotten in  the  rejoicmg  ovei  the  defeat  of  the  candidates  of  the  domi- 
nant part>.  The  city  was  "saved"  from  the  professional  politicians, 
the  reformers  exulted.  They  had  lost  sight  of  the  fact  that  their 
candidates  were  elected  only  because  of  public  wrath  over  the  im- 
peachment of  the  governor.  On  their  merits  alone,  their  candidates 
would  have  been  rejected  at  the  polls. 

The  new  mayor  announced  that  retrenchment  would  be  his  aim. 
He  had  made  similar  announcement  when  he  accepted  federal  office 
some  months  previous,  and  he  followed  his  announcement  then  by  the 
appointment  of  a  so-called  efficiency  squad  when  only  a  few  weeks 
in  office.  One  of  the  reasons  for  the  appointment  of  this  squad  was 
the  fact  he  had  discovered  "lost  motion"  among  the  employes  of  his 
office,  the  young  official  told  the  federal  legislature.  He  aimed  to  save 
this  shocking  waste  of  human  energy.  The  legislature  did  not  appre- 
ciate his  effort  and  declined  to  appropriate  the  funds  for  "efficiency" 
service,  as  previously  told. 

For  several  years  prior  to  the  young  official's  election  as  mayor, 
he  had  been  in  close  touch  in  previous  employment  by  the  city,  with 
a  bureau  of  inquiry  supported  by  private  contributions.  The  bureau 
was  organized  by  a  "leading"  citizen  who  was  also  an  important  fac- 
tor in  the  private  philanthropic  society  which  erected  a  hospital  build- 
ing on  one  of  the  city's  newly  acquired  seaside  resorts.  The  city  had 
purchased  a  parcel  of  waterfront  from  the  brother  of  this  "leading" 
citizen  at  a  cost  of  several  million  dollars  soon  after  the  bureau  of 
inquiry  was  organized,  but  not  an  inch  of  the  property  was  used  up 

165 


I 


ti 


to  the  time  the  city  became  bankrupt,  though  the  city  lost  several 
million  dollars  in  interest  and  taxes  on  the  parcel.  The  bureau  made 
no  effort  to  oppose  the  purchase  of  this  parcel  and  it  urged  the  acqui- 
sition of  the  seaside  "park,"  though  it  had  previously  condemned  its 
acquisition  when  the  larger  area  was  offered  for  a  smaller  sum. 

The  bureau  of  inquiry  was  conducted  by  three  young  men,  one 
of  whom  was  a  professional  accountant,  another  an  employe  of  the 
philanthropic  society  referred  to,  and  the  third  a  former  employe  of 
a  large  corporation  in  another  city.  It  was  said  that  he  had  conducted 
or  reorganized  the  culinary  department  of  that  corporation  before  he 
engaged  in  civic  work  in  the  Great  City.  These  three  young  men 
directed  the  affairs  of  the  bureau  under  the  supervision  of  a  board  of 
trustees  one  of  whom  was  the  philanthropic  citizen  referred  to,  while 
others  were  also  representatives  of  great  wealth.  The  bureau  forced 
its  way  into  every  city  department,  particularly  those  affecting  the 
health,  recreation  and  education  of  the  people,  and  it  aimed  to  devise 
a  new  method  of  city  accounting.  This  was  begun  with  much  dupli- 
cation of  effort  and  large  waste.  The  bureau  experimented  at  public 
expense  and  tons  of  expensively  ruled  books  and  paper  were  discarded 
because  of  faulty  preparation.  When  the  city's  accounting  system 
was  finally  changed  and  a  segregated  budget  established,  it  was  found 
that  the  annual  cost  of  city  accounting  had  increased  one  million  dol- 
lars and  that  the  bureau  had  placed  on  the  city's  payroll,  many  of  its 
own  employes  who  were  paid  as  "experts,"  though  they  had  previously 
been  classed  as  bookkeepers  and  accountants. 

The  influence  of  the  bureau  in  public  affairs  was  commanding. 
It  recommended  changes  in  various  city  departments,  slipped  its  own 
employes  into  places  of  importance  and  obtained  vast  publicity  for 
its  schemes  of  "improvement."  The  chief  function  of  one  of  its  direc- 
tors was  to  inform  the  newspapers  in  as  striking  a  manner  as  advertis- 
ing skill  could  suggest  and  written  blatancy  proclaim,  every  new  pro- 
gram proposed  by  the  bureau,  and  it  happened  on  more  than  one 
occasion  that  the  bureau  appropriated  credit  for  work  done  by  city 
employes  in  no  way  affiliated  with  it.  The  fact  that  the  chief  publicity 
director  afterward  charged  that  the  work  of  the  bureau  was  hampered 
and  controlled  by  the  richest  man  in  the  world  (who  owned  a  large 
share  of  the  city's  bonds)  in  no  wise  lessened  his  activities  for  the 
bureau  while  in  its  employ.  The  director  of  the  bureau  who  replied 
to  the  accusation,  charged  that  his  former  colleague  was  most  diligent 
in  his  effort  to  secure  a  large  donation  from  the  patron  he  later  con- 

166 


demned,  his  disclosure  being  made  before  a  federal  commission  in- 
vestigating the  effect  of  great  private  fortunes  on  the  people.  So  con- 
trolling did  the  influence  of  the  bureau  become  that  its  representatives 
induced  city  officials  to  discard  office  furniture  that  was  in  excellent 
condition  for  use,  and  to  replace  it  with  new  furniture  at  a  cost  of 
many  thousands  of  dollars.  The  discarded  furniture  was  sold  for 
lumber  or  burned  as  kindling  wood. 

As  a  result  of  all  the  favorable  publicity  which  the  bureau  re- 
ceived in  the  early  stages  of  its  career,  it  was  able  to  establish  branches 
in  other  cities  with  the  aid  of  influential  citizens,  and  it  succeeded  in 
extracting  large  sums  of  money  from  these  municipalities  and  from 
private  citizens.  The  result  of  their  work  in  these  cities  was  probably 
on  a  par  with  that  in  the  Great  City,  where  private  citizens  contributed 
one  million  dollars  in  ten  years  and  where  the  cost  of  government 
advanced  steadily.  When  the  efforts  of  the  bureau  began  in  the  Great 
City,  the  annual  budgetary  expenditures  were  one  hundred  and  six- 
teen million  dollars.  This  increased  to  more  than  two  hundred 
million  dollars  at  the  final  windup,  not  only  of  the  city,  but  of  the 
bureau  itself.  The  cry  of  the  bureau  for  several  years  was  "efficiency 
and  economy,"  but  in  the  face  of  an  ever-growing  budget  and  an  ever- 
rising  tax  rate,  the  joke  of  "economy"  was  discontinued,  the  slogan 
being  changed  to  "efficiency"  only. 

The  mayor's  announced  policy  of  retrenchment  was  acceptable  to 
all  the  people  because  of  the  city's  financial  plight.  Those  who  followed 
the  course  of  public  events  in  the  Great  City  realized  that  the 
burden  of  government  had  become  too  great.  It  was  also  clear 
THAT  WHILE  THE  PUBLIC  DEBT  WAS  RISING  AND 
WHILE  THE  COST  OF  GOVERNMENT  WAS  INCREASING, 
THE  PROFITS  ON  PUBLIC  FRANCHISES  WERE  SWELLING 
THE  ALREADY  SWOLLEN  FORTUNES  OF  ONLY  A  FEW  MEN 
AND  FAMILIES.  IT  WAS  ALSO  CLEAR  THAT  THE  CITY'S 
FINANCIAL  RESTORATION  COULD  BE  ACCOMPLISHED 
ONLY  BY  A  RESTITUTION  OF  PUBLIC  PROPERTY.  Not  a 
single  member  of  the  city's  financial  board,  including  the  mayor  him- 
self,  even  suggested  such  a  step,  though  they  had  taken  great  pams 
during  recent  years  to  relieve  land  speculators  of  real  estate  which 
the  latter  were  unable  to  sell  and  which  they  carried  only  at  great  loss. 
This  generosity  on  the  part  of  responsible  city  officials  involved  the 
city  in  great  debt  and  large  financial  loss. 

167 


The  city  was  deprived  for  many  years  of  a  large  share  of  its 
rightful  income  from  public  service  corporations  which  juggled  their 
accounts  to  show  that  no  profit  remained  to  the  city  under  the  terms 
of  the  franchise,  and  the  city  lost  heavily  on  other  large  investments. 

As  already  told,  it  received  no  profit  whatever  (only  interest  and 
amortization)  on  fifty  million  dollars  invested  in  the  first  subway,  and 
it  received  virtually  no  income  from  one  hundred  million  dollars  in- 
vested in  four  large  bridges.  The  receipts  from  these  bridges  was  less 
than  the  laboring  cost  of  maintenance  and  the  private  company  which 
operated  the  subway  profited  to  the  extent  of  thirty  per  cent,  on  actual 
investment.  The  railroad  company  to  which  the  city  had  virtually 
turned  over  three  of  its  four  largest  bridges,  deducted  its  franchise 
tax  from  the  charge  for  bridge  use,  leaving  the  city  virtually  without 
remuneration.  The  test  of  service  with  these  public  service  corpora- 
tions seemed  to  be  the  extent  to  which  the  city  could  be  cheated. 

The  city  received  no  income  and  spent  half  a  million  dollars  each 
year  for  the  operation  of  one  of  its  short  subway  lines  constructed  at 
a  cost  of  fourteen  million  dollars,  and  it  was  certain  to  be  without 
income  for  interest  and  amortization  on  the  bonds  issued  for  the  new 
subways.  .The  city  was  assured  of  an  annual  loss  of  many  million 
dollcurs  so  long  as  these  new  subway  contracts  remained  in  force  and 
the  operating  companies  were  guaranteed  full  earnings  on  old  and 
new  lines  and  six  per  cent,  on  every  dollar  spent  for  improvements 
and  extensions  for  elevated  system.  The  privilege  of  extending  and 
third  tracking  these  elevated  lines  was  worth  many  millions  of  dollars. 
The  city's  bonds  were  only  a  second  lien  on  the  property  and  the  pri- 
vate operating  companies  were  saved  several  million  dollars  franchise 
tax  because  the  city  "owned  the  property."  So  far  as  the  city  was 
concerned,  ownership  was  only  a  mockery.  The  city  sold  its  most 
valued  asset  for  a  certain  annual  deficit,  and  it  bound  itself  to  main- 
tain indecent  subway  crowding  to  keep  the  deficit  down.  Under  such 
circumstances  the  test  of  cleverness  in  financial  dealings  with  the  city 
seemed  to  be  in  hoodwinking  the  city  until  it  was  prostrate  and  until 
its  property  owners  were  exhausted. 

The  city  suflfered  heavy  losses  from  other  municipal  enterprises. 
It  cost  one  million  dollars  in  loss  of  tsixes  and  interest  on  outstanding 
bonds  each  year  for  the  glory  of  maintaining  a  municipal  building,  and 
it  cost  one  million  dollars  in  loss  of  taxes  and  interest  and  in  deficient 
rental  for  a  row  of  piers  used  by  the  shipping  combine.  The  rental 
was  half  that  charged  by  private  owners  for  the  same  facilities.    The 

168 


shipping  combine  failed  prior  to  the  city's  collapse  and  the  city's  in- 
come from  its  docks  was  otherwise  diminished  because  of  the  great 
war.  In  spite  of  this  fact,  the  mayor  was  clamorous  for  large  expen- 
ditures for  a  new  marginal  railroad  and  for  the  purchase  of  private 
piers  along  the  waterfront  of  one  of  the  city's  principal  boroughs,  and 
he  was  erecting  a  row  of  piers  to  accomodate  large  ocean  traffic  m 
another  borough  where  a  private  railroad  corporation  controlled  the 
waterfront.  Two  piers  under  construction  cost  six  million  dollars 
and  the  city's  certain  loss  on  this  investment  was  approximately  one 
hundred  thousand  dollars  a  year.  The  mayor  intended  to  erect  other 
piers  along  this  privately  controlled  waterfront  after  the  two  under 
construction  were  finished.  In  order  to  enter  into  these  vast  enter- 
prises, it  was  necessary  that  the  city  be  supplied  with  money  or 
credit  which  it  did  not  have  and  accordingly  seventy  million  dollars 
of  dock  bonds  were  released  from  the  debt  limit  on  the  theory  that 
they  were  self-sustaining.  As  a  result  of  the  great  war,  the  city's 
dock  revenues  were  diminished  and  the  legality  of  these  seventy  mil- 
lion dollars  of  bonds  was  questionable. 

The  city  lost  one  million  dollars  a  year  on  the  operation  of  its 
ferries  which  it  purchased  from  private  individuals  after  profits  from 
ferry  operation  ceased,  due  to  bridge  competition.  Large  private  for- 
tunes had  been  made  out  of  ferry  franchises  as  told  in  a  preceding 
chapter.  The  city  was  a  heavy  loser  on  its  gas  and  electric  light  fran- 
chises as  previously  told,  and  it  lost  on  a  privilege  extended  to  an  oil 
company  to  operate  a  pipe  line  under  the  city's  streets,  across  the 
island  borough.  This  oil  company  was  controlled  by  the  richest  man 
in  the  world,  was  capitalized  at  five  million  dollars,  and  one  of  its 
chief  assets  was  the  privilege  which  it  enjoyed  from  the  city.  The  net 
revenue  to  the  city  for  the  franchise  was  exactly  one  hundred  and 
forty-nine  dollars  and  fifty  cents  a  year. 

The  city  had  leased  all  its  water-front  for  far  less  than  was  ob- 
tained by  private  pier  owners  for  similar  facilities,  and  it  was  a  final 
assault  on  the  city's  credit  in  connection  with  its  remaining  water- 
front that  brought  the  city  mismanagement  to  a  head.  The  mayor  had 
determined  to  turn  over  a  large  part  of  the  water-front  of  one  of  its 
principal  boroughs  to  a  company  to  be  organized  by  the  railroads  with 
the  city  as  subordinate  partner,  so  that  the  railroads  might  acquire  the 
profits  of  terminal  operation.  The  mayor  proposed  to  buy  railroad 
rights  extended  by  the  city  to  two  dock  and  terminal  companies,  to 
purchase  their  equipment  and  to  connect  their  lines,  and  he  estimated 

169 


the  cost  at  fifteen  million  dollars.  Under  the  terms  of  the  contract 
which  he  prepared  when  previously  a  member  of  the  city's  financial 
board,  the  city  was  guaranteed  five  per  cent,  interest  and  amortiza- 
tion on  only  half  his  estimated  cost,  seven  million,  five  hundred  thou- 
sand dollars.  In  order  that  the  transaction  might  be  fully  carried  out, 
it  was  certain  that  the  cost  to  the  city  would  be  at  least  twice  fifteen 
million  dollars. 

The  transaction  involved  the  purchase  by  the  city  of  a  vast  tract 
of  land  owned  by  the  mayor's  boon  companion,  the  land  speculator, 
which  was  to  be  used  as  a  classification  yard  by  the  railroad  in  connec- 
tion with  the  new  state  barge  canal,  and  the  land  speculator  had  al- 
ready filed  a  claim  of  two  million,  eight  hundred  thousand  dollars 
against  the  state  for  "consequential"  damages  to  his  property.  He 
expected  a  similar  sum  from  the  city  for  the  property.  In  connection 
with  this  terminal  project  the  mayor  had  also  proposed  the  purchase 
of  half  a  dozen  piers  owned  by  one  of  the  two  companies  whose 
railroad  rights  were  to  be  acquired.  These  piers  were  to  be  taken  at 
a  cost  of  ten  million,  one  hundred  thousand  dollars.  THE  CITY 
OWNED  VACANT  WATERFRONT  ADJOINING  THESE 
PIERS,  FOR  WHICH  IT  PAID  APPROXIMATELY  EIGHT 
MILLION  DOLLARS  AND  WHICH  LAY  UNUSED  FOR 
MANY  YEARS.  The  bulk  of  this  property  was  acquired  from  the 
brother  of  the  philanthropic  citizen  previously  referred  to,  while  the 
remainder  was  purchased  from  the  same  land  ring  that  operated  with 
the  land  speculator  whose  property  was  to  be  taken  in  this  terminal 
enterprise.  The  most  pernicious  part  of  the  project  was  the  arbitrary 
power  which  it  conferred  on  the  company  that  operated  the  terminal 
railroad,  to  tax  every  ounce  of  foodstuff  and  merchandise  that  entered 
the  city  through  the  three-mile  strip  of  water-front  which  the  terminal 
railroad  would  serve.  The  company  could  fix  its  own  terminal  charges 
and  always  show  that  its  earnings  were  insufficient  for  city  profits. 

The  mayor  had  his  own  notions  of  economy  in  public  matters  and 
he  exercised  them  while  in  office.  As  head  of  the  city's  investigating 
bureau  several  years  previous,  he  had  increased  the  administrative 
cost  of  his  office  thirty  per  cent.,  and  as  responsible  member  of  the 
city's  financial  board,  he  caused  a  similar  increase  in  the  management 
of  the  office  to  which  he  was  elected.  As  mayor  he  added  two  secre- 
taries to  his  staflf,  being  already  supplied  with  a  pair,  and  these  addi- 
tioned  aides  he  required  to  relieve  him  of  his  vast  labor.  An  unsym- 
pathetic state  civil  service  body  declined  to  exempt  these  two  addi- 

170 


tional  secretaries  from  competition,  and  after  vehement  protest,  the 
mayor  dispensed  with  the  service  of  one  of  them,  keeping  three  in 
his  employ.  The  mayor  as  candidate  had  pledged  himself  to  main- 
tain the  integrity  of  the  merit  system,  but  he  decUned  to  submit  his 
assistant  secretaryships  to  competitive  examination. 


m 


! 


p  -^ 

two     T» 
«•  -  «* 

c 


ill  II  Pt 

■i   4>'m  . 


•=  S      o  •?  Q 


c  ca  ««  V  o 


ii 


172 


CO 


a 

o 


o 

•2 

u 

u 

u 

Wi 

cd 

09 

to 


s 

o 

4> 


CO 

o 


CHAPTER  XXVI 

THE  CITY  FAILED  BECAUSE  ITS  BORROWING  CAPACITY 
WAS  EXHAUSTED,  ITS  POWER  OF  TAXATION  OVER- 
REACHED AND   ITS   PRINCIPAL  ASSETS   IN   THE 
HANDS  OF  INDIVIDUALS  AND  PRIVATE  COR- 
PORATIONS. 

The  new  administration  proved  a  failure,  not  because  it  was 
unable  to  realize  the  city's  financial  plight,  but  because  of  inefficiency 
in  checking  public  extravagance.  The  threat  of  bankruptcy  had  long 
been  felt  and  it  was  hoped  that  the  new  administration  would  exert 
sufficient  force  to  dam  the  flood  that  was  rising.  Its  main  eflForts, 
however,  were  directed  elsewhere;  instead  of  curtailing  expenditures 
it  increased  them  and  indulged  in  theoretical  government.  Ten  years 
prior  to  the  city's  collapse,  its  financial  prospect  was  made  plain  by  a 
former  financial  officer  who,  in  a  carefully  prepared  document,  pointed 
to  insolvency  as  the  city's  ultimate  end.  The  warning  of  this  official 
went  unheeded. 

At  the  time  the  Great  City  was  created  through  a  consolidation 
of  separate  communities,  one  of  the  largest  of  these  municipal  divi- 
sions was  financially  exhausted.  Others  in  the  group  were  likewise 
embarrassed,  and  they  clung  for  support  to  the  stronger  member  of 
the  combination.  The  management  of  the  Great  City  during  the  first 
four  years  of  consolidation  was  regarded  as  extravagant.  The  annual 
budgetary  expenditures  averaged  eighty-nine  million  dollars,  while 
the  public  debt  for  the  greater  city  was  increased  from  three  hundred 
and  forty-two  million  to  four  hundred  and  twelve  million  dollars,  an 
average  annual  increase  of  seventeen  million,  five  hundred  thousand 
dollars.  During  the  succeeding  two  years  under  a  "reform"  adminis- 
tration, the  city's  budget  averaged  ninety-nine  million  dollars  a  year 
and  the  public  debt  rose  to  four  hundred  and  sixty-nine  million  dol- 
lars, an  increase  of  fifty-seven  million  dollars  in  two  years.  During 
the  succeeding  six  years,  under  another  administration,  the  city's  an- 
nual budget  averaged  one  hundred  and  twenty-eight  million  dollars, 
the  highest  being  one  hundred  and  fifty-six  million  dollars  in  the  last 
year.    THE  PUBLIC  DEBT  WAS  NOW  SEVEN  HUNDRED 

173 


AND  NINETY-FIVE  MILLION  DOLLARS,  AN  INCREASE  OF 
THREE  HUNDRED  AND  TWENTY-SIX  MILLION  DOL- 
LARS, OR  MORE  THAN  SEVENTY  PER  CENT.  The  annual 
budget  was  now,  at  the  end  of  twelve  years,  MORE  THAN  TWICE 
the  first  year. 

The  annual  budget  and  the  public  debt  continued  to  rise  each 
year  until  insolvency  was  reached  at  which  time  the  budget  stood  at 
MORE  THAN  TWO  HUNDRED  MILLION  DOLLARS.  THE 
ENTIRE  DEBT  OF  THE  CITY  ON  WHICH  INTEREST  WAS 
PAID  WAS  LARGER  THAN  THE  DEBT  OF  THE  NATION, 
IT  EXCEEDED  ONE  THOUSAND,  FOUR  HUNDRED  MIL- 
LION DOLLARS.  This  sum  included  one  hundred  and  sixty  mil- 
lion dollars  borrowed  in  anticipation  of  taxes,  and  three  hundred 
million  dollars  in  bonds  held  in  the  city's  sinking  fund.  The  net 
bonded  debt  of  the  city  was  approximately  one  thousand  million  dol- 
lars, an  increase  of  more  than  two  hundred  per  cent,  since  consolida- 
tion. During  that  same  period  the  city  had  actually  paid  interest  on 
two  billion,  five  hundred  million  dollars  borrowed  in  various  sums 
each  year  in  anticipation  of  the  receipt  of  taxes,  an  average  annual 
loan  of  one  hundred  and  forty  million  dollars  for  eighteen  years. 
Besides  this  sum  the  city  issued  approximately  seven  hundred  mil- 
lion dollars  in  corporate  bonds  for  "permanent"  public  improvements, 
making  a  grand  total  borrowing  in  eighteen  years  of  THREE  BIL- 
LION, TWO  HUNDRED  MILLION  DOLLARS. 

Only  a  small  part  of  the  two  billion,  five  hundred  million  dollars 
borrowed  for  administrative  purposes  actually  left  the  vaults  of  the 
bankers  at  any  one  time,  the  lending  institutions  advancing  money 
only  as  needed  by  the  city.  The  city  drew  two  per  cent,  interest  on 
the  balance  which  remained  in  the  banks*  vaults,  and  it  paid  from 
four  to  six  per  cent,  interest  on  the  full  amount  borrowed.  The  lend- 
ing institutions  made  a  double  profit  on  the  city's  money— the  regu- 
lar rate  of  interest  paid  by  the  city  less  two  per  cent,  interest  allowed 
on  deposit  and  a  special  rate  of  interest  for  loans  on  "call"  to  stock 
exchange  houses.  When  the  stock  market  was  active  and  money 
scarce,  call  money  rose  to  ten  and  fifteen  per  cent.  The  profits  of 
the  bankers  from  the  city  on  temporary  loans  were  more  than  fifty 
million  dollars  in  eighteen  years  and  their  profits  on  corporate  bonds 
sold  for  "permanent"  public  improvements,  approximated  twenty-five 
million  dollars,  the  total  bankers'  profits  on  city  bonds  and  notes  ex- 
ceeding seventy-five  million  dollars  in  eighteen  years. 

174 


The  influence  of  the  bankers  in  city  affairs  was  controlling,  and 
this  was  shown  not  only  in  the  city's  continuous  borrowing,  but  in 
the  refunding  of  eighty  million  dollars  of  corporate  stock  notes  which 
matured  soon  after  the  great  war  began.     The  city  needed  twenty 
million  dollars  besides  this  sum,  a  total  of  one  hundred  million  dollars, 
and  the  bankers  declined  to  furnish  this  amount  for  less  than  six 
per  cent,  interest.    They  also  exacted  a  commission  of  one  million, 
six  hundred  thousand  dollars  in  the  shape  of  excess  premium  on 
eighty  million  dollars  exchange,  and  this  excess  was  paid  by  the  Great 
City  in  order  that  foreign  bondholders  might  be  paid  in  gold  as  de- 
manded.    The  two  banking  firms  which  organized  the  syndicate  to 
take  up  the  one  hundred  million  dollar  loan,  paid  less  than  fifteen 
million  dollars  in  gold  on  the  foreign  debt,  the  balance  being  taken  up 
in  commercial  credit.    The  interest  charge  on  the  entire  loan  was 
six  million  dollars  the  first  year  and  six  per  cent,  on  unpaid  balances 
each  year  until  the  debt  was  liquidated.    The  interest  rate  on  city 
bonds  had  advanced  steadily  and  reached  four  and  a  half  per  cent, 
prior  to  the  war.    It  was  apparent  that  the  city's  growing  debt  was 
depreciating  its  credit,  and  that  a  climax  must  soon  arise.    The  face 
value  of  each  one  hundred  dollar  fifty-year  bond  at  four  per  cent, 
was  paid  three  times  over  before  the  bond  was  cancelled,  so  the  city 
actually  owed  three  thousand  million  dollars  instead  of  one  thousand 
million  dollars  when  it  became  insolvent    The  habit  of  mortgaging 
the  future  for  public  improvements  had  been  fostered  and  encouraged 
by  the  bankers  whose  clients  were  growing  rich  out  of  excess  profits 
on  industries  and  who  sought  government  securities  for  investment. 
The  new  administration  aimed  to  improve  the  city's  affairs  so 
far  as  within  its  power  lie,  but  its  limitations  were  pronounced.    The 
tendency  of  the  administration  was  toward  "efficiency,"  and  it  de- 
veloped a  mania  for  governmental  fads  and  fancies.    One  of  these  fads 
was  "social  service,"  and  the  term  was  used  to  extract  large  sums 
of  money  from  the  city  treasury.    The  nature  of  this  "social  service" 
was  revealed  through  an  investigation  of  the  circumstances  surround- 
ing the  appointment  of  forty-seven  young  men  and  women  as  so- 
called  social  "experts."    The  pretext  for  their  appointment  wthout 
competitive   examination   was   that   they   were  "specially"  qualified 
for  the  work  intended  by  the  new  charities  commissioner.     The  in- 
vestigation showed  that  some  of  these  "experts"  were  under  twenty- 
one  years  of  age,  that  others  were  strangers  in  the  Great  City  and 
were  appointed  only  after  they  paid  a  "registration"  fee  to  a  private 

175 


I 


HilPli' 


school  of  philanthropy  where  the  charities  commissioner  lectured. 
It  was  also  shown  that  these  "experts"  in  social  service  were  grossly 
deficient  in  the  finer  sensibilities  essential  in  dealing  with  the  city's 
poor. 

The  mayor  of  the  city  heatedly  charged  that  the  investigation 
was  designed  as  a  political  attempt  to  discredit  his  administration, 
but  the  report  of  the  investigation  committee  showed  that  not  only 
was  the  civil  service  law  evaded  in  this  instance,  but  that  civil  service 
regulations  were  flagrantly  violated  in  the  appointment  of  about  five 
hundred  so-called  "experts"  during  the  first  year  of  the  new  adminis- 
tration. In  all,  about  one  thousand  names  were  added  to  the  city's 
payroll  during  that  period,  the  aggregate  salary  roll  of  ninety  million 
dollars  being  increased  a  million  dollars  thereby.  Many  of  these 
so-called  "experts"  acknowledged  on  the  witness  stand  that  they 
had  no  previous  training  whatever  in  the  work  at  which  they  were 
employed  in  contravention  of  civil  service  rules. 

The  mayor  maintained  in  office  a  tax  commissioner  whose  in- 
clination was  for  the  single  tax;  that  is,  for  a  tax  on  real  estate  only 
instead  of  on  real  estate  and  personal  property.  There  was  more  per- 
sonal than  real  estate  wealth  in  the  Great  City,  and  the  tax  commis- 
sioner's program  meant  an  excessive  burden  on  one  form  of  wealth 
instead  of  an  even  tax  on  both.  When  a  tax  on  personal  property  was 
first  established  many  years  before  the  city's  collapse,  personal 
wealth  was  assessed  at  several  billion  dollars.  Taxes  were  collected 
on  only  a  small  portion  of  this  sum,  the  bulk  of  the  assessment  being 
"sworn  off."  Real  estate  assessments  on  which  taxes  were  levied 
INCREASED  FROM  TWO  BILLION,  FIVE  HUNDRED  MIL- 
LION TO  EIGHT  BILLION  DOLLARS  DURING  EIGHTEEN 
YEARS  OF  THE  CONSOLIDATED  CITY,  WHILE  ASSESS- 
MENTS ON  PERSONAL  PROPERTY  ON  WHICH  TAXES 
WERE  LEVIED,  SHRANK  FROM  FIVE  HUNDRED  AND 
FIFTY  MILLION  TO  THREE  HUNDRED  AND  FIFTY  MIL- 
LION DOLLARS.  It  was  obvious  from  these  figures  that  the  tax 
commissioner's  efforts  to  assess  the  cost  of  government  against  real 
estate  had  produced  the  grossest  inequality  and  tax  injustice.  Among 
those  who  suffered  were  many  thousands  of  persons  who  invested 
their  savings  in  city  property,  in  the  hope  that  they  would  enjoy  a 
competency  in  later  years.  These  persons  were  taxed  out  of  their 
equities  because  of  the  shrinkage  in  real  estate  values  due  to  excessive 
and  unequal  taxation.    The  records  of  the  real  estate  auction  rooms 

176 


during  several  years  prior  to  the  city's  failure  showed  that  many 
parcels  were  sold  for  even  less  than  the  face  value  of  the  first  mort- 
gage. 

The  inefficiency  of  the  new  administration  was  demonstrated 
when  it  was  proposed  by  one  of  the  mayor's  tax  "experts"  to  tax 
all  private  incomes  exceeding  two  thousand  dollars  a  year.  This 
proposal  caused  deep  indignation  among  the  people  because  a  similar 
tax  had  recently  been  instituted  by  the  federal  government.  The 
people  realized  that  the  administration  was  incompetent  to  increase 
its  revenues  without  inflicting  hardship,  and  their  anger  was  pro- 
voked because  of  the  enormous  profits  derived  by  private  corpora- 
tions from  public  franchises  without  fair  compensation  to  the  city. 
The  problem  was  not  one  of  new  sources  of  revenue  or  of  new  taxa- 
tion, but  only  of  recovering  a  fair  share  of  the  profits  of  public  service 
corporations.  Every  source  of  revenue  affecting  the  people  was  ex- 
hausted, except  increased  revenue  from  excessive  private  fortunes. 

Not  once  did  the  mayor  or  a  single  member  of  his  cabinet  propose 
a  genuine  program  of  economic  reform,  nor  did  one  of  them  propose 
the  reduction  of  a  single  large  salary  even  temporarily.  Instead  of 
this,  the  mayor  urged  the  expenditure  of  nine  million  dollars  for  a 
new  incinerating  plant  in  the  hope  of  future  saving,  and  he  insisted 
on  the  construction  of  the  marginal  railroad.  Another  responsible 
member  of  the  city  government  urged  the  expenditure  of  fifty  million 
dollars  for  new  sewers  in  one  of  the  city's  boroughs,  and  the  city  also 
intended  to  buy  all  private  water  plants  operated  within  its  limits, 
at  a  cost  of  twenty  million  dollars.  The  city  was  extending  its  water 
mains  from  its  new  water  supply  to  the  districts  served  by  these 
companies  and  the  profits  of  the  private  plants  were  threatened.  One 
of  the  mayor's  commissioners  dismissed  several  hundred  day  laborers, 
though  the  commissioners  and  their  immediate  subordinates  enjoyed 
the  comforts  of  office  to  the  last.  They  indulged  the  luxury  of  city 
automobiles  to  and  from  their  homes  and  places  of  business  and  to 
and  from  lunch  each  day,  and  some  of  them  enjoyed  their  mid- 
day meals  with  representatives  of  the  richest  man  in  the  world,  who 
owned  a  large  share  of  the  city's  bonds  and  derived  the  bulk  of  profits 
from  public  service  corporations.  The  government  seemed  to  be 
conducted  for  this  individual  instead  of  for  the  people. 

Instead  of  saving  public  funds,  one  of  the  new  commissioners 
caused  an  expenditure  of  thirty  thousand  dollars  for  glass  partitions 
in  his  office  in  the  city's  new  office  building  and  he  exceeded  his  ap- 

177 


propriation  during  the  first  year  by  two  hundred  thousand  dollars. 
The  partitions  which  were  removed  had  been  installed  only  a  few 
months  previous  at  a  cost  of  several  thousand  dollars,  and  the  build- 
ing itself  was  scarcely  finished  for  occupancy  when  the  alteration  was 
made.    Indifference  to  public  welfare  or  inefficiency  marked  the  con- 
duct of  other  members  of  the  administration,  and  the  mayor  himself 
was  unequal  to  the  task  which  he  had  undertaken.    His  ambition  had 
been  overreached  and  his  shortcomings  were  plain.    He  was  compe- 
tent in  a  smaller  sphere  where  economy  was  no  consideration,  but 
there  was  no  opportunity  to  indulge  inefficient  "reform"  in  the  Great 
City  at  the  time  of  the  great  crisis.    The  mayor's  temperamental  ac- 
tivities were  out  of  place  in  the  office  which  he  occupied.    The  mayor 
tried  to  maintain  that  the  city  was  in  sound  financial  condition  in 
spite  of  all  indications  to  the  contrary,  and  he  expressed  himself  em- 
phatically on  this  point  when  he  rebuked  a  taxpayer  at  a  public  hear- 
ing prior  to  the  city's  collapse.    The  taxpayer  had  protested  against 
a  new  "civic  center"  in  another  borough  and  asserted  that  the  city 
was  bankrupt. 

"Stop  that  nonsensical  talk,"  shouted  the  mayor.    "The  city  is 
NOT  bankrupt.     It's  false." 

The  mayor  was  right.    The  city  was  not  bankrupt ;  only  its  tax- 
payers were  "broke."  THE  CITY'S  SOLVENCY  DEPENDED  ON 
ITS  ABILITY  TO  BORROW  MONEY  AND  ON  ITS  POWER 
TO  TAX  ALL  REAL  ESTATE  UP  TO  TWO  PER  CENT.  PLUS 
THE  DEBT  SERVICE  WHICH  AMOUNTED  TO  MORE  THAN 
SIXTY   MILLION   DOLLARS  ANNUALLY.     REAL  ESTATE 
WAS  UNABLE  TO  PAY  SUCH  A  TAX  AND  THE  COLLEC- 
TION   OF    TAXES    HAD    BEEN    RUNNING    BEHIND    FOR 
YEARS      THE  CITY  WAS  BUYING  ITS  OWN  TAX  LIENS 
SOLD  AT  PUBLIC  AUCTION,  AND  IT  HAD  ISSUED  FORTY 
MILLION    DOLLARS    TO    MAKE    UP    DEFICIENCIES    IN 
TAXES  WHICH  WERE  UNCOLLECTIBLE.     UNDER  SUCH 
CIRCUMSTANCES  IT  WAS  PLAIN  THAT  THE  CITY  COULD 
CONTINUE  BUSINESS  ONLY  ON  A  BANKRUPT  BASIS.  THE 
CITY'S  DEBT  WAS  GREATER  THAN  ITS  PHYSICAL  ASSETS 
AND  ITS  POWER  OF  TAXATION  WAS  EXHAUSTED. 

EITHER  PRIVATE  PROPERTY  WOULD  HAVE  TO  BE 
CONFISCATED  TO  DEFRAY  THE  EXCESSIVE  COST  OF 
GOVERNMENT  OR  THE  CITY  MUST  RECOVER  A  LARGE 
SHARE  OF  THE  PROFITS  ON   PUBLIC   FRANCHISES  TO 

178 


REDUCE  THE  BURDEN  ON  REAL  ESTATE.  THE  FUTURE 
OF  THE  CITY  WAS  PLEDGED  TO  THE  LIMIT  AND  THE 
COST  OF  NEW  IMPROVEMENTS  COULD  BE  MET  ONLY 
OUT  OF  CURRENT  EXPENDITURES.  THIS  MEANT  THAT 
PUBLIC  IMPROVEMENTS  MUST  CEASE  OR  THAT  THE 
BUDGET  WOULD  BECOME  PROHIBITIVE.  THE  CITY  WAS 
AT  THE  END  OF  ITS  FINANCIAL  RESOURCES,  UNLESS 
PERSONAL  PROPERTY  WAS  ADEQUATELY  TAXED  AND 
UNLESS  THE  BULK  OF  PROFITS  ON  PUBLIC  FRANCHISES 
REVERTED  TO  THE  CITY. 


I 


179 


...w.  •/»iUKPAY.  AVQVtr(^  ins. 


Piofits  of  the  Telephone  Monopoly 
In  This  City  Disclosed  by  The 
Postal  Telegraph  Company 


toBiMMM  If  IstBS  Prtfararf  by  Tkat 
Twicg  TM  Gkamti  i>  Cities 


IWwre  CipiiUi  bkti. 


.  TM.  P«M«1  T»l««r<pk  Colapaar  *»•  |  public   reiu   joaooo  bIkmm*  >a4  M^ 


Lighting  Companiet  in  this  City  Made  ?> 
826.483.800  PROFIT  During  Past  Tear 


Tiris  AsMrt  ia  «  Iwmm  H  1%  m  S441.sn.SSI— 4CT0AL  InrntH 
CapM  M  MLf  tIM  Im— "ri»i  CapMaT  af  M  Lifhtini  Canpaiiies 
If  It  1363.111.143— ladufefler  Sreup  Owns  Most  af  Ito 


Assessment  Impravements  Ordered 
By  Board  of  Estimate  Cause  Ruin 


SATURDAY.  JUMEQO  1913. 


To  llany  Property  Owoert 

Ab  Average  of  $18,000,000  Assessed  Etch  Tear  A«jinst  Pra^ 
erty  Owners  Who  Are  Unabie  (o  Pay  Cost  Charnes— Tai 
Liein  oa  42,000  Parcels  Ordereii  Solil  in  Past  FiveTrauL 


OTY  WUMMS  TO  BE  USED  FOR 

PBnriTEIEREFITillSO.BR00KLTI 
WITERFROIT  OIPROVEMEIIT  PUM 


Mi 


VACUT  $mES,  LOFTS  iiir 

BUILDINGS  AL0N6  6th  AVENUE 
AS  MANY  AS  ON  BROADWAY 


Thil  iic«tp*ptr  told  ia  It*  last  uioc 
Mf  tic  vacaat  Itoret.  loit*  aad  b«ild- 


VtcaiKi**  in  Sixth  avcaoc  propArnr 
arc  tar(«  cnoucli  to  wipe  oat  all  proat 
(lom  (cal  ettatc  alone  *!><  ««<■•«.  aW 


BROitOWAT  A  DESERTED  VILUGE  BE- 
UySE  OF  VACANT  STORES  AMD  LOFTS 

Firtf<wliw8  Unaetapiei  ISO  Ti-Let  Spa  for  Yaeut  Lafts.  aid 
lawral  Ertre  Biiilinii  far  last.  Betweea  Mnjkars  uA  Faorteeatb 
itaata    Irtaay  OlddMi  ParUir  AccountaMe. 

A  walk  19  Broa4»ay  jretlerdar  di.-  ,  deere,„«.     An  .thntfatinii  of  th  .  I,  f 
qm4  the  fact  that  property  owncra  I  \2'2*.«>„  t^t    pnr.    far    wUch    the  J 


aloM^ 


j  BBQADWAT  VACANCIES  noilll!!  71 425  StS, 
^;^,^AS  MUY  IS  FWy  fMJMWf  T0 141!  ff. 

lifttaiiatiaSiili«sF«r. 

!•  iMt  Iftvitf  sr  I 

Broadway,  from  17th  to  4Kid  ttrtet,  I  itrect)— Store*:    Nod   %A 
»rtaeat  «a  arcav  af  vacant  (torci.  lofu  I  onv  ooa  •>•«  •»>  iAk»s*<  ^ 


r 


f  Sltre  audi  lift  Tacancict  I  vacamt  «TO"«a.  Lorrt 

••  rulta.  C«n^  a.MiiU.  !        AMD  BUILDINGS  ALON^ 

(        aa  FaiHaStint  CfWdp         ./^^,  » ,       third  avmto*. 
t^/i./;».  at  Haay  as  h  Maohattaa  I    ^^^  „.,,,„„-;r7ac..  *..,..  «.4 

m.  i»      ^.      -  "S Li       .■•_  >      ^    I   l«^f'»  on  Third  aTcone  from  Nintk  t« 

Fulton  Street.  Brooklv*.  lit*  Rroait.  ■    •»•  •.     ;.  .v.—  .•.       -• 


Socrtai 
Stins.Uffi 

M.««.y.W.rf..*n<CliM 

O.J7  >mUj  0««»**»-«J^ 
ctaafa*  0»b*rFi^,«*  *" 


^ifittiii  B 


tMnStfMtt  1 
mOwVacM-  I  

la'aMoaM^f  *lW-> 


iiciir  iTiffs  01 

^  IfSSAU  8TIEET  AR 

^tf^uittsuAL  corarnw 


R«at»  RaT»  Been  Rc<)tteH  WImt* 
Store*  Were  0«e«  at  «  Prtraloi*— 
WUBm  SiT*M  Abo  Skow*  MaDT 
Vacaade*. 


tltr  '-Ant  time  lA  atanr 
'  gm     TBcmnt 


'ya:ii 


ar*  evcB  aore  *«caa- 


Facsimile  reproduction  of  headings  of  articles  published  in  KLEIN'S 

WEEKLY   NEWS. 


180 


The  population  of  the  City  of  New  York  is  estimate  at         5,600,000 

The  permanent  outstanding  debt  of  the  City  of  New 
York  (long  term  bonds)  including  exemptions  from 
the  debt  limit  on  which  interest  is  paid,  is  approxi- 
mately   $1,100,000,000 

The  permanent  and  temporary  debts   of  the  City  of 

New  York  are  approximately $1,400,000,000 

The  City  of  New  York  spends  annually  for  routine  ad- 
ministration, approximately    $140,000,000 

The  city  spends  annually  for  "permanent"  public  im- 
provements, approximately $55,000,000 

The  city  spends  annually  for  interest  on  the  public  debt, 

approximately    $45,000,000 

The  city  spends  annually  for  redemption  and  amortiza- 
tion of  the  public  debt,  approximately $15,000,000 

The  annual  cost  of  government  in  the  City  of  New  York, 
including  debt  service  and  expenditures  for  public 
improvements,  is  approximately $255,000,000 

This  sum  means  an  cumual  expenditure  for  every  man, 

woman  and  child  in  the  community  of $45-53 

Or,  an  annual  expenditure  for  every  family  of  five,  of. .  $227.65 


181 


The  people  of  the  City  of  New  York  pay  annually  for 

gas  to  private  companies,  approximately $44,000,000 

The  people  of  the  City  of  New  York  pay  annually  for 

electric  current  to  private  companies,  approximately.     $34,000,000 

The  people  of  the  City  of  New  York  pay  annually  for 
carfare    to    private   transportation   companies,    ap- 

.      ^1  $95,000,000 

proximately    ^    '      ' 

The  people  of  the  City  of  New  York  pay  annually  for 
telephone   service   to    private   companies,    approxi- 

^  ,  $30,000,000 

mately    *    ' 

The  people  of  the  City  of  New  York  pay  individually 

each  year  for  gas,  an  average  of $7.86 

The  people  of  the  City  of  New  York  pay  individually 

each  year  for  electric  current,  an  average  of $6.25 

The  people  of  the  City  of  New  York  pay  individually 

each  year  for  carfare,  an  average  of $16.96 

The  people  of  the  City  of  New  York  pay  individually 

each  year  for  telephone  service,  an  average  of $5.36 


The  people  of  the  City  of  New  York  consume  about  one-fifth  of 
all  the  gas  manufactured  in  the  United  States. 

The  people  of  the  City  of  New  York  use  about  one-quarter  of  all 
the  electric  current  generated  in  the  United  States. 

The  people  of  the  City  of  New  York  pay  about  one-tenth  of  all 
the  money  spent  for  local  transportation  in  the  United  States. 

The  people  of  the  City  of  New  York  pay  about  one-eighth  of  all 
the  money  spent  for  telephone  service  in  the  United  States. 

182 


The  total  capitalization  (stocks  and  bonds)  of  gas,  elec- 
tric and  transportation  companies  in  the  City  of 
New  York  is $1,221,541,672 

The  total  capitalization  (stocks  and  bonds)  of  trans- 
portation companies  is $840,319,065 

The  total  capitalization  (stocks  and  bonds)  of  gas  and 

electric  companies  is $381,222,607 


Total  operating  revenues  of  gas,  electric  and  transporta- 
tion companies  in  the  City  of  New  York  each  year 

$173,000,000 

are   

Transportation    $95,000,000 

Gas   44,000,000 

Electric    34,000,000 

Total     net  earnings  of  gas,  electric  and  transportation 

companies  in  the  City  of  New  York  each  year  are. .      $65,200,000 

Transportation    $38,000,000 

Gas   10,700,000 

Electric    16,500,000 

Accumulated  surpluses  of  gas,  electric  and  transportation 

companies  in  the  City  of  New  York  are $76,000,000 

Gas  and  electric $57,000,000 

Transportation    19,000,000 


183 


■( 


The  American  Telephone  and  Telegraph  Company  (Bell 
system)  reports  on  Dec.  31,  1914,  that  its  outstanding 
capital  (stocks,  bonds,  and  notes)  is $794,714,907 

Physical  value  of  all  Bell  plants  is  appraised  at $847,204,803 

Company  claims  to  have  added  to  physical  value  of  plant 

from  Jan.  1,  1900,  to  Dec.  31,  1914 $696,960,500 

Company  claims  to  have  surplus  and  reserve  fund  on  Dec. 

31,  1914,  of $189,955,149 

Net  revenues  of  American  Tel.  &  Tel.  Co.  increased  from 
$5,486,058  in  1900  to  $32,334,814  in  1914;  dividends 
increased  from  $4,078,601  in  1900  to  $27,572,675  in 
1914. 


The  people  of  the  City  of  New  York  contributed  about  one-eighth 
of  the  profits  and  surplus  of  the  American  Tel.  &  Tel.  Co. 


The  profits  of  all  public  service  corporations  in  the  City  of  New 
York  are  based  on  public  franchises  and  the  physical  value  of  all  public 
service  properties  has  been  created  out  of  surplus  earnings,  over  and 
above  operating  expenses,  interest,  dividends  and  depreciation. 


184 


The  City  of  New  York  has  invested  in  the  present  op- 
erating subway,  approximately $56,000,000 

The  operating  company  claims  to  have  invested  in  equip- 
ment and  part  construction  of  the  road $48,000,000 

Subway  tickets  sold  from  Oct.  27,  1904,  when  traffic  be- 
gan, to  June  30,  1914 2,332,401,435 

Total  operating  revenues  to  June  30,  1914 $120,084,198 

Total  operating  expense  to  same  date $49,549,845 

Rental  to  city  (interest  on  outstanding  bonds  and  sink- 
ing fund)    $20,549,845 

Operating  company's  gross  profits  to  Dec.  31,  1914 $49,000,000 

Operating  company's  surplus  profits  over  6  per  cent,  on 

investment,  to  same  date $27,500,000 


The  City  of  New  York  is  spending  for  new  subways $164,000,000 

The  operating  companies,  under  contract  with  the  city, 

are  spending $166,000,000 

Under  the  terms  of  the  new  contracts,  the  city's  bonds  are  a  sub- 
ordinate lien  against  the  earnings  of  the  new  subways.  The  city  will 
receive  not  one  cent  revenue  from  the  new  subways  for  at  least  ten 
years,  while  the  private  operating  companies  are  guaranteed  excessive 
earnings  on  old  and  new  subways  and  on  the  elevated  system,  and  six 
per  cent,  interest  on  all  sums  expended  for  extension  of  the  elevated 
lines. 


185 


The  outstanding  debt  of  the  City  of  New  York  on  Dec. 

31,  1911,  according  to  the  federal  census,  was $1,096,860,999 

The  combined  debts  of  the  17  next  largest  cities,  includ- 
ing Chicago,  Philadelphia,  St.  Louis,  Boston,  Cleve- 
land, Baltimore,  Pittsburgh,  Detroit,  Buffalo,  San 
Francisco,  Milwaukee,  Cincinnati,  Newark,  Los  An- 
geles, New  Orleans,  Washington,  D.  C,  and  Minne- 
apolis, were   $804,306,512 

The  total  population  of  N.  Y.  City,  in  1910,  according  to 

the  federal  census,  was 4,766,883 

The  total  population  of  the  17  next  largest  cities,  accord- 
ing to  the  same  census,  was 10,430,818 

The  per  capita  debt  of  the  City  of  New  York,  based 

on  the  federal  census  report,  was $230.10 

The  per  capita  debt  of  the  17  next  largest  cities,  based 

on  the  federal  census,  was $77.11 


The  federal  census  reports  the  revenues  of  184  largest 
cities  in  the  United  States  (including  N.  Y.  City) 
in  1911  as $799,130,719 

Expenditures  of  same  cities  during  same  year $921,242,802 

The  federal  census  adds: 

"The  indebtedness  of  the  184  cities  at  the  close  of  the  fiscal  year 
1910  was  $2,423,977,928,  and  one  year  later  it  was  $2,618,107,501, 
showing  an  increase  of  8  per  cent.  The  figures  show  that,  taken  as 
a  whole,  the  cities  are  increasing  their  payments  for  cost  of  govern- 
ment (including  outlays),  faster  than  their  revenues,  and  as  a  result 
are  increasing  their  indebtedness  even  faster." 


WILL   ALL  THE   CITIES   BECOME   BANKRUPT   AS   A 
RESULT  OF  THIS  RAPID  ACCUMULATION  OF  DEBT? 

186 


Real  estate  property  in  the  City  of  New  York  is  as- 
sessed at  $8,108,763,237 

Personal  property  is  assessed  at $352,051,755 

There  is  twice  as  much  personal  wealth  in  the  City  of  New  York 
as  real  estate  wealth.  If  the  tax  on  real  estate  and  personal  property 
were  equalized— that  is,  if  the  aggregate  assessment  on  each  were  the 
same the  tax  rate  on  real  estate  would  be  about  one  half. 


Real  estate  assessments  against  which  taxes  are  levied,  increased 
from  $2,532,516,819  in  1898  to  $8,108,763,237  in  1915.  Personal  prop- 
erty assessments  shrank  from  $548,987,900  in  1898  to  $352,051,755  m 
1915.  Personal  property  pays  about  four  per  cent,  of  the  total  taxa- 
tion each  year;  real  estate  pays  ninety-six  per  cent. 


The  population  of  the  City  of  New  York  increased  from  3,272,418 
in  1898  to  5,600,000  in  1915.  Personal  property  consisting  of  stocks, 
bonds,  mortgages,  etc.,  has  more  than  doubled  in  value  durmg  the 
same  period.  Instead  of  increasing  assessments  on  personal  property 
they  diminished  thirty-five  per  cent.,  while  the  total  real  estate 
assessments  increased  more  than  three  hundred  per  cent 


The  prof ito  on  public  franchises  in  the  City  of 
New  York  have  created  EXCESSIVE  private 
fortunes  for  only  a  few  individuals  and  families. 

The  physical  value  of  ALL  public  service  prop- 
erties  in  the  city  has  been  created  out  of  SUR- 
PLUS earnings  over  and  above  operating  ex- 
penses, interest,  dividends  and  depreciation. 

If  the  city  recovered  the  profiU  on  public  f ran- 
chises,  taxation  on  real  estate  would  be  reduced 
one-half. 

HOW  ELSE  CAN  THE  BURDEN  ON  REAL 
ESTATE  BE  LIFTED  ? 


187 


i 


CO 

M 

o\ 

H 


bio 
< 
CO 


CO 

iz: 

l-H 

a 

o 

u 


188 


DO  YOU  KNOW  that  the  extraordinary  profits  of  Standard 
Oil  during  the  past  fifty  years  have  produced  economic 
despotism  in  the  United  States? 

DO  YOU  KNOW  that  John  D.  Rockefeller  and  his  asso- 
ciates draw  a  large  share  of  the  profits  of  industrial  and 
public  service  corporations  and  that  they  own  a  vast 
amount  of  government,  state  and  city  bonds? 

DO  YOU  KNOW  that  they  control  the  industrial  life  of  the 
nation? 

If  you  do  not  know  these  facts  you  should  read 

STANDARD  OIL  or  THE  PEOPLE 

and  learn  how  the  wealth  of  the  nation  is  concentrated  and 
what  remedy  MUST  be  applied  to  restore  economic  freedom 
and  preserve  civilization  in  America.  Learn  also  how  Rocke- 
feller's fortune  of  more  than  ONE  THOUSAND  MILLION 
DOLLARS  is  invested.  Every  person  interested  in  the  future 
of  the  country  and  in  his  own  welfare,  should  have  a  copy  of 
this  book  which  is  warmly  endorsed  by  patriotic  and  right- 
minded  citizens  and  which  can  be  obtained  from  the  author 

and  publisher 

HENRY  H.  KLEIN, 

Tribune  Building,  N.  Y.  City. 

Half-cloth  covei-,  50  e.c^ts. :   :  ^'i  ,.  ,P?ipc?r  cover,  25  cents. 

-'  •  "',»'! 

Reduced  rates  for  large  ordfef^.      Send  money  order,  stamps  or  cash. 


t  »  . »  < 


COLUMBIA  UNIVERS  TY  LIBRARIES 


1 


,i;. 


0041420551 


! 

COLUMBIA   UNIVERSITY   LIBRARIES 

This  book  is  due  on  the  date  indicated  below,  or  at  the 
expiration  of  a  definite  period  after  the  date  of  borrowing,  as 
providpd  by  the  library  rales  or  by  special  arrangement  with 
the  Librarian  in  charge. 

OATC  BORROWCO 

DATE  DUE 

DATE  BORROWED 

DATE  DUE 

1 

--..X     0  ^  l^t 

4 

i 

KP\^  i«>  »^' 

■ 

^ 

.-^ 

' 

C28  (358)  lOOM 

i 

D670 
K67 


K67 


D670 


NEH 

/n5H  oHni  j 

0CT«719W| 


Klein,  Henry  H. 

Bankrupting  a  great  city. 


5-7-59 


'->^   d2Lr     /c^'<-'   ^'^'^^* 


To  Bindery 


y^ 


^S'-   4iLr. 


^^c^  iu%^.    (T^S) 


BOUNJO 


MAY  2  8  j359 


f  '  ■    •  t  ;  \ 


3 ".'_'' 


"it 


•Wli 


■^=.  ' 


•^\    \'        ri^i 


-|<i^U-ff    "  "^  i. 


^•y+»^ , 


END  OF 
TITLE 


